Mutual Funds: How to become a crorepati with the 15x15x15 investing rule?
₹15,000 for 15 years in a fund that has earned 15% returns over the period. This amounts toInvested Amount: ₹27,00,000Estimated Returns: ₹74,52,946Total Value of the Returns: ₹1,01,52,946.
Also Read: Mutual Funds: What is a step-up SIP and how does it work?While the 15x15x15 rule offers a useful starting point, it’s essential to consider several key factors:Market volatility: The 15% yearly return in the 15x15x15 formula is an example, not a promise.
Mutual fund investments carry inherent risks, and actual results might vary greatly.Stock markets are naturally volatile, therefore their value swings. This can have an impact on your mutual fund returns.
The mutual funds you choose also have an impact, as various funds invest in different assets and have different risk profiles, resulting in a variety of potential returns. In general, the longer you stay invested, the more market volatility tends to average out, potentially bringing returns closer to long-term historical averages, though this is not guaranteed.Asset allocation matters: Although it is a helpful simplification, asset allocation—which is essential for risk management in mutual fund investing—is not included in the 15x15x15 formula.
The risk profiles of various asset classes, including stocks, bonds, and cash equivalents, vary. By spreading your investments across these sectors, you can spread your risk and possibly reduce the volatility of your entire portfolio.
Also Read: ‘You must start an SIP…’ Radhika Gupta's advice on investing in mutual funds to Shark Tank India staff backstageYour asset allocation ought to align with your financial objectives.
