Everyone invests in mutual funds through SIPs, but most people cannot create the fund they want. Today, we will discuss a simple formula that can help you become a millionaire in 20 years.
To do this, you need to use the 4x15x20 formula. With this formula, anyone can easily save up to ₹8 crore in 20 years. Let’s understand this formula with an example.
What is the 4x15x20 Formula?
4 means you need to invest ₹4, 000 every month as a SIP.
15 means you should increase your investment by 15% each year.
20 means the investment period will be 20 years.
Let’s understand this formula better with some simple calculations.
SIP Calculation Example
Invest ₹4, 000 every month in a SIP.
Assume the return is 12% per year.
Invest for 20 years.
Increase your investment by 15% every year (Step-Up feature).
If you do this, you can get ₹1.21 crore after 20 years.
The total money you put in (principal) will be ₹4, 91, 700.
The rest,₹7, 18, 500, comes from returns.
If you do not use the step-up, you will get only ₹3, 95, 700 after 20 years.
Disclaimer: This is for learning only. It is not investment advice. The stock market can be risky. Talk to a certified investment advisor before investing.