What is 15-15-15 Rule in Mutual Fund

The 15-15-15 investing principle suggests dedicating 15% of your income over 15 years to a mutual fund offering 15% annual returns, aiming to realise long-term financial objectives.
Turn small SIPs into wealth with the 15-15-15 strategy.
3 mins read
14-June-2025

What if achieving long-term wealth didn’t require you to be an expert in finance, but just to follow one simple rule? That’s the appeal of the 15-15-15 rule a strategy designed for everyday investors who want to grow their money steadily without getting overwhelmed. It’s not about timing the market or chasing hot stocks; it's about discipline, consistency, and the magic of compounding.

The idea is simple: invest regularly, give it time, and let the returns do the heavy lifting. This article breaks down the 15-15-15 rule and shows how it can help you build a substantial financial cushion without needing a massive starting amount. This rule isn’t just theory it’s a blueprint for disciplined wealth-building. Whether you’re earning Rs. 20,000 or Rs. 1 lakh a month, applying the 15-15-15 rule can help you unlock financial freedom over time. Explore Top-Performing Mutual Funds!

Understanding the 15-15-15 principle in mutual funds

The 15-15-15 rule is more than just a catchy phrase it’s a powerful framework for wealth creation using mutual funds. Here’s what it means:

  • Invest Rs. 15,000 per month
  • Stay invested for 15 years
  • Aim for 15% average annual returns

Stick to this plan, and by the end of the 15 years, your portfolio could cross Rs. 1 crore — all thanks to the power of compounding. This rule shows that with a disciplined SIP and the right fund, even modest monthly investments can lead to impressive outcomes. A SIP of Rs. 15,000 may feel like a stretch, but with flexible plans and fund options, even Rs. 3,000 or Rs. 5,000 monthly can create significant value when started early. Start Investing or SIP with Just Rs. 100!

You don’t need to be wealthy to start; you just need to stay committed. Use tools like a SIP calculator to visualise your future corpus based on your inputs   and watch how small actions today can create big results tomorrow.

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What is compounding?

Compounding is what happens when your money starts earning returns — and then those returns start earning returns too. It’s like a snowball rolling down a hill: the longer it rolls, the bigger it gets.

Let’s say you invest Rs. 1,000 in a mutual fund offering 10% annual returns. After one year, you have Rs. 1,100. In the second year, you earn 10% not on your original Rs. 1,000, but on Rs. 1,100 — giving you Rs. 1,210. This might seem small at first, but give it 10, 15, or 20 years, and you’ll see exponential growth.

Compounding rewards patience. The earlier you start and the longer you stay invested, the more powerful your returns become — which is exactly what the 15-15-15 rule aims to leverage.

What is the power of compounding?

The true magic of investing lies in compounding — not just earning returns, but earning returns on those returns. Over time, this cycle creates a snowball effect, where your money grows faster the longer it stays invested. It's not linear growth; it's exponential.

For example, investing Rs. 1,000 for 10 years at 10% per annum gives you about Rs. 2,593. But stretch that to 20 years? It jumps to Rs. 6,727. And if the rate of return increases to 15%, the outcome becomes even more dramatic. That’s the power of time and patience in action.

The real takeaway here: start early and stay consistent. Even if your monthly investment is small, the time you give your money can make a massive difference. The power of compounding isn’t just mathematical it’s emotional too. Watching your investments grow can boost your confidence and help you stay consistent even when markets fluctuate. Open Your Mutual Fund Account Today!

Examples of compounding

Let’s break down compounding with some real-world-style examples to see how it actually works:

1. SIP in action

Say you invest Rs. 5,000 every month through a SIP in a mutual fund earning 12% annually:

  • After 5 years: Around Rs. 4.1 lakh
  • After 10 years: Around Rs. 11.6 lakh
  • After 20 years: Over Rs. 50 lakh

This is possible because each year’s earnings are reinvested and start generating earnings of their own.

2. Boosted returns, better results

Let’s say the returns increase to 15% instead of 12%:

  • After 20 years: Your investment could cross Rs. 76 lakh — a huge jump thanks to compounding at a higher rate.

3. Increasing contributions

If you start with Rs. 3,000/month and increase it by 10% annually, your Rs. 10 lakh corpus could grow to nearly Rs. 60 lakh in 20 years (assuming 12% annual return). This shows how compounding plus step-up SIPs can supercharge your results.

4. Real-life fund performance

Historically, several equity mutual funds in India have delivered 12–15% returns over the long term. Despite short-term volatility, staying invested through market ups and downs can help you benefit from long-term compounding.

It’s not just about how much you invest, but how consistently and intelligently you do it. Understanding compounding helps you make smarter long-term decisions. Explore Top-Performing Mutual Funds!

Benefits of 15-15-15 rule in mutual fund investments

Following the 15-15-15 rule isn’t just a clever trick — it’s a structured way to achieve your financial goals. Here's how it helps:

1. Long-term wealth creation

Investing 15% of your income every month in a mutual fund that delivers 15% annual returns for 15 years could give you a sizeable corpus. For instance, if your monthly income is Rs. 50,000, investing Rs. 7,500 per month could yield more than Rs. 57 lakh after 15 years.

2. Protection against inflation

Inflation quietly eats away at your money’s value. But if your investment grows at 15% per year while inflation hovers around 6%, you’re not just preserving value — you’re increasing it. For example, Rs. 1,000 invested at 15% annually for 20 years grows to Rs. 16,366 — much more than what you’d need to outpace inflation.

3. Goal-based discipline

Having a structured approach like 15-15-15 helps you stay focused. Whether your goal is a child’s education, early retirement, or buying a home, this rule creates a clear, actionable roadmap.

4. Simplicity with impact

The best part? You don’t need to overthink or constantly chase returns. Just be regular with your SIPs, stay invested, and let the numbers do their job.

Key takeaways

  • Invest 15% of your income every month into mutual funds.
  • Do it consistently for 15 years — no breaks, no excuses.
  • Aim for 15% annual returns, which is achievable through equity mutual funds over the long term.
  • Let compounding do the heavy lifting. The longer you stay invested, the greater your money multiplies not just linearly, but exponentially.
  • Start small if needed. You don’t need to wait until you can invest large sums. Even starting with Rs. 100 or Rs. 1,000 per month can put you on the right path.
  • Use tools like SIP calculators to visualise your potential corpus and track progress toward your financial goals.

Conclusion

The 15-15-15 rule isn’t a gimmick — it’s a real-world strategy grounded in the time-tested power of compounding. In a world of overwhelming financial advice, this rule offers clarity and direction: set aside a fixed percentage of your income, be patient, and stay invested.

It works because it builds discipline, makes investing habitual, and leverages time and returns to build serious wealth. Whether your goal is financial independence, your child’s education, or just peace of mind, this approach can serve as your foundation. Consistency, not capital, is what fuels long-term wealth. If you are ready to start small and think big, even Rs. 100 a day can spark the journey. Start Investing or SIP with Just Rs. 100!

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Frequently asked questions

How to invest 15-15-15?

There are different ways to interpret this question, but one possible answer is:

Invest Rs. 15,000 per month for 15 years in a mutual fund that gives 15% annual returns. This is called the 15-15-15 rule of compounding, which can help you accumulate Rs. 1 crore. If you continue for another 15 years, you can get Rs. 10.38 crore.

How does compounding benefit mutual fund investments?

Compounding is earning interest on interest or having further growth on growth. It allows your balance to grow faster than simple interest, which only considers the principal amount. The more money you invest and the longer it stays, the more compound interest you earn. Reinvesting dividends and distributions also increases your compound interest.

What is 15-15-15 investment policy?

The 15-15-15 investment policy suggests investing 15% of your income for 15 years in mutual funds yielding 15% annual returns. This strategy leverages compounding to grow savings significantly over time, aiming to achieve long-term financial goals.

How to calculate 15-15-15 rule?

To calculate the 15-15-15 rule, multiply 15% of your monthly income by 12 to get the annual investment amount. Invest this amount monthly for 15 years in a mutual fund targeting 15% annual returns. Use an SIP calculator to project potential earnings based on these inputs.

Can we get a 15% return on a mutual fund?

Achieving a 15% return on a mutual fund depends on market conditions and fund performance. Historically, some equity mutual funds in India have delivered annualised returns of 12-15% over the long term, but returns can vary based on economic factors and market fluctuations.

What happens if I invest Rs. 10,000 a month in SIP for 15 years?

If you invest Rs. 10,000 per month in an SIP for 15 years, assuming an average annual return of 12%, your investment could potentially grow to approximately Rs. 37 lakhs. Higher returns or longer investment periods can further increase the final corpus due to the compounding effect.

What happens if I invest Rs. 10,000 a month in SIP for 15 years?

If you invest Rs. 10,000 per month in an SIP for 15 years, assuming an average annual return of 12%, your investment could potentially grow to approximately Rs. 37 lakhs. Higher returns or longer investment periods can further increase the final corpus due to the compounding effect.

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Disclaimer

Bajaj Finance Limited (“BFL”) is an NBFC offering loans, deposits and third-party wealth management products.

The information contained in this article is for general informational purposes only and does not constitute any financial advice. The content herein has been prepared by BFL on the basis of publicly available information, internal sources and other third-party sources believed to be reliable. However, BFL cannot guarantee the accuracy of such information, assure its completeness, or warrant such information will not be changed. 

This information should not be relied upon as the sole basis for any investment decisions. Hence, User is advised to independently exercise diligence by verifying complete information, including by consulting independent financial experts, if any, and the investor shall be the sole owner of the decision taken, if any, about suitability of the same.