What is 15 * 15 * 15 rule in mutual funds
4 March, 2025
Synopsis
The 15-15-15 rule in mutual funds presents a strategic investment approach.
The strategy offers benefits through SIP mode including compounding gains, investment flexibility to start/stop/skip, and rupee cost averaging across market cycles.
Success factors include early investment initiation, portfolio diversification, regular rebalancing, and maintaining long-term investment discipline without panic selling.
It would have been great had there been some formula to strike gold with mutual fund investments! Like all investors, you, too, must have this wish. Well, then, you are not indulging in wishful thinking; such a formula exists in reality—it is popularly known as the 15*15*15 rule!
What is the 15*15*15 rule in mutual funds?
The 15*15*15 rule of mutual funds could get you mining rights of a goldmine! This simple yet powerful strategy involves investing ₹15,000 every month for 15 years in a mutual fund that has the potential to give a 15% annual return. Stick to this plan, and you could be looking at a whopping ₹1 crore in your investment account at the end of this period. If you calculate it, you'd only put in ₹27 lakhs, but you will earn ₹73 lakhs. If you keep investing in the same fund for another 15 years, which is a total of 30 years, you might get more than ₹10 crores. In this case, you have invested ₹54 lakhs, and you will earn over ₹9 crores.
Advantages of the 15-15-15 rule in mutual fund investment
The 15-15-15 rule with mutual funds offers numerous advantages:
Compounding Gain from SIP: This rule considers the SIP mode to draw benefits from compounding. It is one of the most essential factors of mutual funds, which promote small yet consistent investments that help to boost financially.
Flexible Procedure: SIP introduces flexibility in managing investments and finances. You can start, stop, or skip SIPs as needed. Moreover, you can redeem your investment whenever required at your convenience, especially if there's no lock-in period.
Rupee Cost Averaging: By investing a certain amount every month (like ₹15,000), SIP allows for rupee cost averaging with the changing NAVs. It means getting extra units when the market is low and fewer units when the NAV is high, thereby settling at the average.
Here are five quick tips for the 15x15x15 rule of mutual funds
Start Early: Begin investing as soon as you can. The earlier you start, the more time your money gets to grow.
Diversify: Spread your investments across mutual funds to lower risk. It will also aid in balancing your portfolio.
Balance your Portfolio: Adjust your investments regularly. Sell some successful ones and buy more of those that need to do better to maintain a balanced portfolio: the more diverse the portfolio, the more the market knowledge.
Never Indulge in Panic Selling: Don't sell your investments alarmingly due to short-term market changes. Stay invested for as long as you can.
The 15-15-15 rule provides financial security and wisdom in mutual fund investments. Moreover, starting early and staying consistently active are the keys to fulfilling your financial aspirations in the long run and getting higher returns from compounding. Understanding the importance of diversification in the portfolio is equally important.
Start your investment journey by downloading HDFC Bank SmartWealth App from the Play Store/App Store. You can select and invest in pocket-friendly options from top-rated mutual funds based on your risk and financial objectives.
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