15-15-15 Rule in Mutual Funds: Build Wealth with SIP & Compounding

What are Mutual Funds 15 * 15 * 15?

The 15-15-15 Rule refers to investing ₹15,000 monthly via a Systematic Investment Plan (SIP) in a mutual fund that potentially delivers a 15% compounded annual growth rate (CAGR) for 15 years. At the end of this period, the investment can grow to approximately ₹1 crore, with just ₹27 lakhs in capital input.

If extended for another 15 years (i.e., 30 years), the same investment can yield over ₹10 crores, highlighting the exponential impact of compound interest. This strategy is not hypothetical; it’s mathematically sound and grounded in the historical performance of well-managed equity mutual funds over long durations. While 15% returns are aspirational and not guaranteed, many diversified equity funds have achieved this over market cycles.
 

How Compounding Grows Your Money Over Time

Compounding is the cornerstone of wealth generation. You unlock the compounding effect when your investment generates earnings, which are reinvested to generate further gains. Over time, this creates a snowball effect, where your corpus grows exponentially rather than linearly.

Let’s break this down:

• In the first year, your ₹15,000 monthly SIP accumulates ₹1.8 lakhs.
• With an annual return of 15%, you earn ₹27,000 by year-end.
• In year two, returns are earned on both your original investment and the ₹27,000 gains.
• Repeat this over 15 years, and the compounding escalates significantly in the latter half.

In financial planning, compounding is often called the world's eighth wonder. The longer you let it work, the more dramatic the results—hence why early and consistent investment is paramount.
 

How Does Compounding Work?

Compounding works on two critical parameters: time horizon and rate of return. The longer you remain invested and the higher the rate of return, the greater the compounded value of your investment.

In SIPs, each month’s investment grows separately. Hence, the ₹15,000 invested in month one has 180 months (15 years) to compound, while month two’s investment has 179 months, and so on.
The formula used in SIP compounding is:

FV = P × {[(1 + r)^n – 1] / r} × (1 + r)

Where:
FV = Future Value,
P = SIP amount,
r = monthly rate of return (annual return / 12),
n = total number of months

This mathematical approach illustrates how disciplined investing, even with moderate monthly inputs, can create massive wealth over time.
 

Advantages of the 15-15-15 Rule in Mutual Fund Investment

1. Systematic Wealth Creation
The Rule enforces a disciplined monthly investment approach. SIPs remove emotional decision-making from the equation, ensuring investments continue regardless of market sentiment.

2. Power of Compounding
When ₹15,000 is invested regularly for 15 years, the compound growth curve becomes steeper later, reflecting the compounding power. Investors benefit most when they allow their corpus to grow undisturbed over time.

3. Rupee Cost Averaging
By investing monthly, investors buy more mutual fund units when prices are low and fewer when prices are high. Over time, this averages the purchase cost per unit, reducing the impact of market volatility.

4. Flexibility and Liquidity
SIPs offer the flexibility to pause, increase, reduce, or stop investments at any time. This adaptability makes it easier to align with life stages, cash flow changes, or investment goals.

5. Behavioural Discipline
Investing based on this Rule instils a sense of financial discipline, long-term focus, and resistance against panic selling during market downturns.

What Are the Different Types of Rule 15 15 15 in Mutual Funds?

While the classic version assumes ₹15,000 monthly investment at 15% for 15 years, various permutations have emerged based on investor goals and risk profiles:

a) 10-15-15 Rule
Invest ₹10,000 monthly instead of ₹15,000, targeting ₹70 lakhs+ in 15 years. This is ideal for moderate savers.

b) 15-12-20 Rule
Here, ₹15,000 is invested monthly for 20 years with an expected return of 12%—a more conservative yet still wealth-generating approach.

c) 15-15-10 Rule
If the return expectation is only 10%, then ₹15,000 monthly over 15 years results in a corpus of about ₹62 lakhs. This strategy is suitable for investors prioritising stability over high returns.

d) 30-15-15 Rule
Doubling the SIP amount to ₹30,000 with the same tenure and return can lead to ₹ two crore in 15 years—perfect for high-income individuals targeting faster wealth accumulation.

These variants cater to different income levels, risk appetites, and time horizons but are all anchored in consistent investing and the compounding effect.
 

Conclusion

The 15-15-15 Rule in mutual funds is more than just a strategy—it is a philosophy rooted in financial discipline, patience, and the power of compounding. This Rule offers a clear, realistic, and result-oriented path for investors with long-term goals like retirement planning, children’s education, or financial independence.

According to the 15 15 15 rule, if you invest ₹15,000 per month for 15 years in a mutual fund that delivers a 15% annual return, you could potentially build a corpus of over ₹1 crore. By following the mutual funds 15 * 15 * 15 strategy, investors aim to create significant wealth with disciplined SIP investing. Many financial planners use what is 15 15 15 rule as an example to explain the benefits of early and sustained investment. Applying rule 15 15 15 helps investors set realistic financial goals using systematic investment plans.

However, one must remember that 15% returns are not guaranteed and rely heavily on fund selection, market cycles, and consistent monitoring. Still, if the Rule is used as a guideline rather than a rigid formula, it can act as a north star in one's wealth journey.