SIP: Experts in personal finance tell us one such infallible formula, which is called the ’15x15x15 Rule’. This can be extremely effective for those who have not yet started working for their retirement. This simple rule can make you a millionaire, and that too before retirement. Let’s understand this magical formula in detail and know how it works.
What is SIP
SIP i.e. Systematic Investment Plan, is a disciplined and effective way of investing to create a big fund in the long term. In this, you invest a fixed amount in mutual funds every month, due to which your capital grows over time due to compound interest.
What is the 15x15x15 formula
The ’15x15x15 formula’ is a simple but powerful principle of investment:
₹15,000 per month
You have to make a SIP (Systematic Investment Plan) of ₹15,000 every month.
15% average return
This investment should be in a mutual fund that is giving an average return of 15% annually.
Investment for 15 years
You have to continue this investment continuously for 15 years.
This is the 15x15x15 formula. With this formula, you will become a millionaire even before retirement. In 15 years, you will have accumulated a huge fund of ₹1.01 crore. You can use this money to buy a house, for children’s education, or as your retirement fund. This formula is a great example of discipline, patience, and the power of compound interest.
How many funds will be created if you invest for 20 years instead of 15 years
If you continue your investment for 20 years instead of 15 years, the wonderful magic of compounding will work and your fund will grow to ₹2.27 crores. This shows how a few extra years of investment can more than double your corpus.
For example
Starting at the age of 40
If you start this investment at the age of 40, then at the age of 60 (at the time of retirement) you will have a fund of ₹2.27 crores. This amount will be enough to live a comfortable and worry-free life after your retirement.
The advantage of starting at an early age
It is important to understand that the younger the age at which retirement planning is started, the bigger the fund can be created. If you start this investment at the age of 25, then by the age of 45 you will have accumulated ₹2.27 crores, which will allow you to live a luxurious life as per your wish, or even consider early retirement. This is the biggest advantage of investing in the long term.