Mutual fund calculator: Well know author Shiv Khera has written in his book ‘You Can Win’ that ‘winners don’t do different things but they do things differently. This quote holds well for equity mutual fund investors as well. With a simple pun in normal investment strategy an investor can become a crorepati in 15 years saving ₹10,000 per month in mutual funds SIP (Systematic Investment Plan).
15 x 15 x 15 rule of mutual funds
Speaking on how to become a crorepati at fastest rate through mutual fund investments, Pankaj Mathpal, Founder & CEO at Optima Money Managers said, “15 x 15 x 15 rule of mutual funds say that an investor can accumulate ₹1 crore by investing ₹15,000 per month for 15 years.” He said that the rule says that an equity mutual fund investor can expect to get at least 15 per cent return on one’s money if its time horizon is 15 years or more.
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However, this can be made pssible by investing ₹10,000 per month as well. what one need is to make some adaptation in one’s investment strategy.
SIP step up strategy
On how to accumulate ₹1 crore by investing ₹10,000 per month in equity mutual funds, Kartik Jhaveri, Director — Wealth Management at Transcends Capital said, “Normally, it has been found that people invest in mutual funds using monthly SIP. But, they continue investing same monthly amount even when their time horizon is long. My suggestion to such mutual fund investors is to maintain annual SIP or maintain step up in monthly SIP in sync with increase in one’s income. For more simple strategy, one can maintain annual step up in monthly SIP.”
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On annual step up that one can maintain while investing in equity mutual funds in monthly SIP mode, Kartik Jhaveri of Transcends Capital said, “In general, one can maintian 10 per cent annual step up in one’s monthly SIP to reap the benefit of compounding benefit.”
Highlighting the benefit of SIP step up, Pankaj Mathpal of Optima Money Managers said, “A long term investor enjoys interest on interest, which we call compounding benefit. However, if an investor follows annual step up, this compounding benefit gets maximized.”
SIP calculator
So, assuming an investor invests ₹10,000 per month for 15 years, maintaining 10 per cent annual step up, mutual funds SIP calculator suggests that one’s SIP of ₹10,000 would yield ₹1,03,11,841 or ₹1.03 crore. In this assumption, annual SIP yield has been assumed 15 per cent per annum following 15 x 15 x 15 rule of mutual funds.
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See SIP step up calculation below:
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In this ₹10,000 monthly SIP for 15 years along with 10 per cent annual step up, one would be investing ₹38,12,698 whereas its interest would come around ₹64,99,143.
Disclaimer: The views and recommendations given in this article are those of individual analysts. These do not represent the views of Mint. We advise investors to check with certified experts before taking any investment decisions.
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Updated: 30 Sep 2023, 11:26 AM IST
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