We often see famous people making videos on how to build Rs 1 crore just through SIPs. Chances are, you might have also heard about the 15-15-15 rule in mutual funds. It is a simple yet very powerful formula that shows how small, consistent investments in mutual funds can grow into a huge corpus over time.
This concept is based on three 15’s: investing Rs 15,000 every month for 15 years at an assumed 15% annual return. Sounds too good to be true? Well, it’s just the power of compounding.
The 15-15-15 rule is less about going for quick gains or timing the market and more about giving your money time in the market.
Let’s understand how this rule actually works, why investors swear by it, and how it could help you reach that Rs 1 crore milestone.
What is the 15*15*15 rule in mutual funds?
Now imagine that you are investing Rs 15,000 every month for 15 years and earning an average return of 15% per year. By the end of those 15 years, you would have made a total investment of Rs 27 Lakh, but your total value of investment after those 15 years will be somewhere around Rs 1,01,52,946 — roughly Rs 1 crore.
That is the importance of the 15-15-15 rule in mutual funds. It makes one understand how time and consistency can turn their SIPs into significant wealth.
The rule is entirely based on the principle of compounding, where your returns themselves start earning returns over time.
If you continue the same Rs 15,000 SIP for another 15 years (total 30 years) at 15% expected return, your total investment increases to Rs 54 Lakh, but the wealth you accumulate jumps to around Rs 10.38 crore. That’s nearly 10 times more, with just twice the investment amount.
The Power of Compounding
The power of compounding in mutual funds is often called the eighth wonder of the world. With this, your investments are not just earning returns, but those returns themselves start earning more returns over time.
Compounding lets your money make more money. Every time you reinvest the profits from your SIP investments, they start generating their own returns, creating a snowball effect. The longer you continue, the faster your money grows.
When applied to mutual funds through Systematic Investment Plans (SIPs), compounding works best because you are investing regularly and staying invested over multiple market cycles. This longer investment horizon maximizes the rewards of compounding.
How Does Compounding Work?
Assume that in the year 2005, two friends, Arjun and Riya, started investing Rs 10,000 every month. Riya preferred a fixed deposit that offered a steady 7% annual return, while Arjun chose to invest through a Systematic Investment Plan (SIP) in an equity mutual fund expected to deliver around 15% average annual return.
For the first few years, Arjun’s portfolio fluctuated because of market ups and downs, while Riya’s investment grew steadily. But Arjun stayed consistent and did not stop or pause his SIPs even during market dips.
Over time, his investment value began to rise rapidly as the power of compounding kicked in. Here’s a simplified comparison of how their wealth grew over time:
| Year | Arjun’s Total Investment (₹) | Arjun’s Portfolio (15%) (₹) | Riya’s Total Investment (₹) | Riya’s Portfolio (7%) (₹) |
|---|---|---|---|---|
| 2005 | 1,20,000 | 1,28,604 | 1,20,000 | 1,23,926 |
| 2006 | 2,40,000 | 2,58,000 | 2,40,000 | 2,57,000 |
| 2007 | 3,60,000 | 4,19,000 | 3,60,000 | 4,07,000 |
| 2008 | 4,80,000 | 6,06,000 | 4,80,000 | 5,67,000 |
| 2009 | 6,00,000 | 8,23,000 | 6,00,000 | 7,39,000 |
| 2010 | 7,20,000 | 10,80,000 | 7,20,000 | 9,23,000 |
| 2015 | 13,20,000 | 25,90,000 | 13,20,000 | 15,30,000 |
| 2020 | 19,20,000 | 48,70,000 | 19,20,000 | 26,90,000 |
| 2025 | 25,20,000 | 93,10,000 | 25,20,000 | 38,60,000 |
After 20 years, both had invested the same amount — Rs 25.2 lakh. But Arjun’s disciplined SIP grew to Rs 93 lakh, while Riya’s fixed deposit reached only around Rs 38 lakh.
Advantages of the 15-15-15 rule in mutual fund investing
- By investing Rs 15,000 every month for 15 years at an average 15% return, your returns start generating their own returns. This enables you to build a much larger corpus than one-time or irregular investments.
- The 15-15-15 rule works best when you stay consistent. SIPs help you invest regularly without worrying about market timing. Auto payments keep you on track and build a disciplined habit.
- SIPs are flexible. You can start, stop, or increase your monthly investments anytime. There is also no lock-in period, so you can redeem when needed.
- When you invest a fixed amount monthly, you buy more units when prices are low and fewer when prices are high. This averages out your cost and helps you handle market volatility better.
Frequently Asked Questions
How to Invest Using the 15-15-15 Rule?
Start a SIP of Rs 15,000 per month in an equity mutual fund and stay invested for 15 years. With around 15% annual returns, your investments can grow to nearly Rs 1 crore.
How Will Compounding Benefit Mutual Funds?
Compounding lets your returns earn more returns. The profits you make get reinvested, helping your investment value grow faster over time. The longer you stay invested, the more powerful it becomes.
How to Calculate the 15-15-15 Rule?
The rule means investing Rs 15,000 every month for 15 years at an assumed 15% annual return. You can calculate it using any SIP calculator — just enter monthly amount ₹15,000, tenure 15 years, and expected return 15%. The result shows a maturity value of approximately ₹1 crore.
