Mutual funds: Monthly SIP you need to accumulate ₹79 crore when you turn 60

15 x 15 x 15 rule of mutual funds suggests that if an investor starts investing from 25 years of age, then starting a mutual fund SIP at the age of 25 for next 15 years with monthly SIP of ₹15,000, the investor can expect to get 15 per cent return on one’s SIP and ₹1 crore maturity amount. However, if we go by tax and investment experts’ views, one should increase one’s monthly SIP with increase in one’s income using annual step up plan. By doing this, the mutual fund investor will be able to maximise one’s return as he or she would get higher compounding benefit in long term.

How to become crorepati

On how to utilise 15 x 15 x 15 rule of mutual funds, Pankaj Mathpal, MD & CEO at Optima Money Managers said, “By investing ₹15,000 per month in SIP mode, a mutual fund investor can expect to get 15 per cent return on one’s money after 15 years and hence the maturity amount would become around ₹1 crore. However, my suggestion for the mutual funds investor is to increase one’s monthly SIP by 15 per cent after completion of each one year, as one’s annual income rise by 12 to 15 per cent and hence raising monthly SIP amount by 15 per cent won’t be a hectic task. By doing this, one would be able to get more than ₹2 crore maturity amount after 15 years.”

Mutual fund SIP calculator

Advising mutual fund investors to start ₹15,000 at the beginning of one’s career and continue investing till one retires, SEBI registered tax and investment expert Jitendra Solanki said, “One should start ₹15,000 monthly SIP in equity mutual funds and continue investing till 60 years as it would enable him or her to maximise the benefit of early settlement in one’s career and enhance higher maturity amount in one’s retirement fund.”

On how early investment would benefit mutual funds investor, Jitendra Solanki said, “If someone begins mutual fund SIP at the age of 25, he or she would be able to invest for 35 years, leading to higher compounding benefit and maturity amount.”

On whether the mutual fund scheme chosen for long term would exist for that much long or not, Jitendra Solanki clarified, “If an asset management company (AMC) closes down then other AMC would take over and the scheme would continue further. At the time of takeover, new AMC gives old investors two options — to continue or exit. If the investor is convinced with the new AMC and its fund managers, it can continue with one’s mutual fund SIP without any hassle. In case, he exercises the exit option, the investor can choose other good scheme and divert the maturity amount there and continue investing in SIP mode at new scheme. This will allow the investor to continue the long term investment strategy without any impact on one’s investment goal.”

Mutual fund calculator

Suppose a mutual funds investor starts ₹15,000 monthly SIP at the age of 25 and continues investing in it for next 35 years maintaining 15 per cent annual step up, the as per the SIP calculator, one would get a maturity amount of ₹79,16,51,398 or say around ₹79 crore.

Out of these ₹79,16,51,398, investor’s net investment amount would be ₹15,86,10,628 and net return on one’s money would be ₹63,30,40,770.

See mutual fund calculator below:

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Mutual funds to buy

On mutual fund plans that one can look at for long term, Pankaj Mathpal of Optima Money Managers listed out the following mutual funds:

1] ICICI Prudential Large & Mid-cap Fund;

2] Aditya Birla Sun Life Multi-cap Fun; and

3] Nippon India Flexi Cap Fund.

Disclaimer: The views and recommendations made above are those of individual analysts or wealth management companies, and not of Mint. We advise investors to check with certified experts before taking any investment decisions.