18x15x12 SIP Formula: In how many years, Rs 15,000 monthly investment can grow to Rs 1,14,00,000 corpus; know calculations
Unlock the Power of the 18x15x12 Formula: Whether you’re a salaried professional or an individual investor, strategic planning can help you build substantial wealth over time. If your goal is to create a retirement corpus of around Rs 1 crore, the 18x15x12 formula can be an effective strategy. In this article, we’ll walk you through the calculations to show how investing Rs 15,000 monthly through a Systematic Investment Plan (SIP) using this formula can help you accumulate over Rs 1.14 crore for retirement.
What is Compounding?
Compounding is the process where your investment earns returns not only on the principal amount but also on the accumulated earnings from previous periods, leading to exponential growth over time.
What is SIP?
SIP, or Systematic Investment Plan, allows you to invest a fixed sum in a mutual fund scheme at regular intervals, typically monthly.
Investment Frequency Options
Investments via SIP can be made daily, weekly, monthly, quarterly, half-yearly, or annually, depending on your financial goals and preferences.
Start Early – Key to Wealth Creation
Starting your SIP early gives your investments ample time to grow, benefiting from the power of compounding. The earlier you start, the more time your money has to grow.
How the 18x15x12 Formula Helps You Build Wealth
With the 18x15x12 formula, a Rs 15,000 monthly SIP can grow into a retirement corpus of over Rs 1 crore. Here’s how it works:
Breaking Down the 18x15x12 Formula:
- 15: Represents a monthly SIP investment of Rs 15,000.
- 12: Denotes the anticipated annualized SIP returns (12 per cent).
- 18: Represents the number of years you’ll invest.
Total Investment Over 18 Years
With a monthly SIP of Rs 15,000, your total investment over 18 years will amount to Rs 32,40,000.
Calculating Expected Capital Gains at 12% Annualised Return
Assuming an average annual return of 12 per cent, your Rs 32,40,000 investment will generate approximately Rs 82,41,589 in capital gains over the 18-year period.
Total Amount After 18 Years
At the end of 18 years, your total accumulated amount will be around Rs 1,14,81,589, which includes both your initial investment and the long-term capital gains.
18x15x12 SIP Formula – Full Calculation for a Rs 1.14 Crore Retirement Corpus
By adhering to the 18x15x12 SIP formula, you can build a retirement corpus of Rs 1.14 crore in just 18 years.
- Total Investment: Rs 32,40,000
- Capital Gains: Rs 82,41,589
- Total Value: Rs 1,14,81,589
What You Should Know About SIP Returns
It’s important to understand that SIP is a market-linked investment, meaning returns are not guaranteed. The 12 per cent return mentioned above is an estimate based on historical market performance, and actual returns may fluctuate depending on market conditions.
Benefits of Compounding
Despite market risks, SIP remains one of the most popular wealth-building strategies due to its long-term benefits, including rupee cost averaging. This strategy helps to smooth out the impact of market fluctuations and reduces the risk of investing a lump sum at the wrong time.
Plan Wisely for the Long Term
While SIPs help mitigate risks and provide steady returns over time, it’s crucial to remain aware of the potential market risks and plan your investments accordingly.