What is the 15*15*15 Rule in Mutual Funds? Learn How to Build Wealth

In the world of mutual fund investing, there are various strategies that can help investors accumulate wealth over the long term. One such popular rule, especially in India, is the 15*15*15 Rule. This simple yet powerful concept has gained traction for its effectiveness in building a substantial corpus through disciplined investing. The rule suggests that investing ₹15,000 per month in mutual funds, over a period of 15 years, with an annual return of 15%, can lead to significant wealth accumulation.

In this blog, we will dive deep into the 151515 Rule, its application in the Indian mutual fund market, and how investors can leverage it to achieve their financial goals. We will also provide tables, historical data, and case studies to illustrate the power of this rule and how it compares to other investment strategies.

What is the 151515 Rule?

The 151515 Rule in mutual funds is a simple formula designed to help investors understand how systematic investment over a long period can lead to substantial wealth creation. Here’s how the rule works:

15: Invest ₹15,000 every month.
15: Continue investing for 15 years.
15: Assume a 15% annual rate of return.

At the end of the 15 years, by following this strategy, an investor can potentially accumulate a large corpus, thanks to the power of compounding.

The Formula:

The 151515 Rule is based on the concept of Systematic Investment Plans (SIPs), where an investor regularly invests a fixed sum in mutual funds. The total investment at the end of 15 years is calculated using the following formula:

FV=P×(((1+r)^n−1)/r)Where:

FV = Future Value (final corpus)
P = Monthly investment (₹15,000)
r = Monthly interest rate (15% annually or 1.25% monthly)
n = Number of months (180 months for 15 years)

How Does the 151515 Rule Work?

Let’s break down how this rule leads to significant wealth creation using an example. Suppose an investor follows the 151515 Rule, investing ₹15,000 per month for 15 years at an assumed annual return of 15%. The total amount invested over the 15-year period would be:

TotalInvestment=₹15,000×12×15=₹27,00,000

However, thanks to the power of compounding, the corpus at the end of 15 years will be much higher. Using the SIP formula:

FV=₹15,000×(((1+0.0125)^180−1)/0.0125)=₹1,00,27,601

This means that by investing ₹27 lakhs over 15 years, the investor ends up with a corpus of approximately ₹1 crore.

Table: 151515 Rule Example

Year	Total Investment (₹)	Corpus Value (₹)
1	1,80,000	1,95,407
5	9,00,000	12,26,811
10	18,00,000	37,98,498
15	27,00,000	1,00,27,601

As illustrated, the 151515 Rule helps investors accumulate wealth over time, with the power of compounding playing a significant role in boosting returns.

Power of Compounding in the 151515 Rule

The power of compounding is the core principle that makes the 151515 Rule so effective. Compounding occurs when the returns generated on an investment begin to earn additional returns over time. The longer you stay invested, the more your investments grow, creating a snowball effect.

Let’s look at the growth in returns over time using the 151515 Rule:

Year	Monthly Investment (₹)	Total Investment (₹)	Corpus Value (₹)
5	15,000	9,00,000	12,26,811
10	15,000	18,00,000	37,98,498
15	15,000	27,00,000	1,00,27,601

As seen, the corpus at 15 years is over ₹1 crore, which is nearly four times the initial investment, thanks to compounding. The longer the investment horizon, the more pronounced the effect of compounding becomes, making it one of the most powerful tools for wealth creation.

Historical Data: How the 151515 Rule Performs in Indian Markets

The Indian equity market has delivered strong returns over the long term, making the 15% annual return assumption for the 15*15*15 Rule reasonable for equity mutual funds. Historically, the BSE Sensex and NIFTY 50 indices have delivered average annualized returns in the range of 12–15% over the past few decades.

Historical Returns of Indian Stock Market:

Time Period	BSE Sensex Average Return (%)	NIFTY 50 Average Return (%)
10 years	13.5	12.8
15 years	14.2	13.9
20 years	15.1	14.8

As per historical data, equity mutual funds that invest in large-cap and diversified stocks have the potential to deliver returns in line with the 15% assumption over the long term, making the 151515 Rule a viable strategy for wealth accumulation.

Risks and Considerations for the 151515 Rule

While the 151515 Rule is a powerful tool for long-term wealth creation, it is important to understand the risks and considerations before applying this rule to your investment strategy.

1. Market Volatility

The 15% annual return assumption is based on historical averages. However, the equity market is subject to volatility, and there may be periods of underperformance. Investors should be prepared for fluctuations in returns over the short term.

2. Time Horizon

The 151515 Rule requires a long-term investment horizon of 15 years. It may not be suitable for investors with short-term financial goals or those who need liquidity.

3. Discipline and Consistency

The success of the 151515 Rule depends on consistent monthly investments. Skipping investments or withdrawing funds prematurely can significantly impact the final corpus.

4. Inflation

While the rule generates substantial wealth, investors should also account for inflation. The real purchasing power of the ₹1 crore corpus may be lower in 15 years due to rising costs.

How to Implement the 151515 Rule in Your Portfolio

To successfully implement the 151515 Rule in your investment portfolio, follow these steps:

1. Select Equity Mutual Funds

The 151515 Rule is based on investing in equity mutual funds, which have the potential to deliver higher returns over the long term. Choose funds that have a track record of outperforming the market and have experienced fund managers.

2. Start a Systematic Investment Plan (SIP)

A SIP is the best way to implement the 151515 Rule. Set up a SIP for ₹15,000 per month in your chosen equity mutual fund and commit to it for 15 years. Automating the process ensures that you stay disciplined in your investments.

3. Monitor Your Portfolio

While the 151515 Rule is a long-term strategy, it is important to monitor your mutual fund portfolio periodically to ensure it aligns with your financial goals. Make adjustments if necessary, but avoid making impulsive changes based on short-term market movements.

4. Reinvest Dividends

If your mutual fund pays dividends, reinvest them to take full advantage of compounding. Reinvestment helps to increase your corpus over time.

Comparison: 151515 Rule vs. Other Investment Strategies

Let’s compare the 151515 Rule with other common investment strategies to see how it stacks up in terms of wealth creation.

Strategy	Investment Amount	Time Horizon	Annual Return (%)	Final Corpus (₹)
151515 Rule (SIP)	₹15,000/month	15 years	15%	1,00,27,601
Fixed Deposit (FD)	₹15,000/month	15 years	6%	43,26,963
Public Provident Fund	₹15,000/month	15 years	7.1%	46,34,544
Stock Market Investment	Lump Sum ₹27L	15 years	12%	1,31,87,612

The 151515 Rule, with a disciplined SIP approach and compounding, outperforms more conservative investment options such as Fixed Deposits and the Public Provident Fund.

Conclusion: Is the 151515 Rule Right for You?

The 15*15*15 Rule is an effective strategy for long-term wealth creation in mutual funds, especially for Indian investors who are looking for a structured and disciplined way to build a substantial corpus. By leveraging the power of compounding, consistent investing, and equity market returns, the rule helps generate significant returns over time.

However, it’s important to consider your financial goals, risk tolerance, and time horizon before adopting this strategy. While the rule offers high growth potential, it requires patience, discipline, and a long-term commitment.

If you’re ready to stay invested for the long haul and take advantage of the equity market’s potential, the 151515 Rule could be an ideal strategy to help you achieve your financial goals.