15X15X15 And 555 Rules: How these 2 SIP strategies can help you generate up to Rs 5.28 cr retirement corpus
Power of Compounding: Are you planning to buy a car or a house, or want to achieve any significant financial goal? If yes, then by aligning these goals with mutual fund investments, you can accelerate your journey toward financial success.
SIP Formula - Rule 555 and Rule 15x15x15
Here are two timeless principles — Rule 555 and Rule 15x15x15 — that can enhance your investment strategy, optimize your financial planning, and help you build long-term wealth.
SIP Investment: Understanding the 15x15x15 Formula
Here’s how the 15x15x15 formula of SIP works:
1. First "15": Invest through SIPs for 15 years.
2. Second "15": Contribute a monthly SIP of Rs 15,000.
3. Third "15": Expect an annualized return of 15%.
5x15x15 SIP Formula: Your Total Investment
If you start a monthly SIP of Rs 15,000 and invest for 15 years, your total investment will amount to Rs 27,00,000.
15x15x15 SIP Formula: Calculating Expected Returns
With an average return rate of 15 per cent, your investment can grow significantly. After 15 years, you could earn approximately Rs 74,52,946 in long-term capital gains.
15x15x15 SIP Formula: Building a Corpus of Over Rs 1.01 Crore
At the end of 15 years, combining your initial investment with the long-term capital gains, you will accumulate an estimated amount of Rs 1,01,52,946.
What is the 'Triple 5' Formula?
The Triple 5 formula is designed to optimise your retirement savings. Here's how it works
1. First 5: Retire five years earlier.
2. Second 5: Increase your SIP by 5% each year.
3. Third 5: By age 55, you could have a fund of Rs 5.28 crore.
Example of the 'Triple 5' Formula
Suppose you start with a monthly SIP of Rs 10,000, increasing it by 5 per cent annually, with an average return of 12 per cent. Over 30 years, you would invest approximately Rs 79.73 lakhs, earning around Rs 4.48 crores as a long-term capital gain. This results in a total corpus of Rs 5.28 crores (approx.).
Post-Retirement Pension Calculation
After paying long-term capital gains tax, even with a conservative interest rate of 6 per cent on an FD at the time of retirement, you will still receive a substantial pension. On a post-tax corpus of Rs 4.74 crores, you will earn around Rs 28.42 lakhs annually at 6 per cent, equating to approximately Rs 2.37 lakhs per month.
Know the Full Calculation
Investing in Equity Mutual Funds:
- Monthly SIP: Rs 10,000
- Annual SIP Increase: 5%
- Expected Return: 12%
- Investment Duration: 30 years
Calculations:
- Total Investment: RS 79,72,662
- Long-Term Capital Gains: Rs 4,47,61,398
- Total Value: Rs 5,27,34,060
- Taxable Corpus: Rs 5,26,34,060
- 10% Long-Term Capital Gains Tax: Rs 5,26,340.60
- Post-Tax Corpus: Rs 47,37,054
- Annual Income at 6% (FD): Rs 28,42,239.24
- Monthly Income: Rs 2,36,853.27
Become a crorepati
By following either of these two powerful strategies — the 555 SIP Formula or the 15x15x15 formula — you can amass a significant corpus and achieve financial independence.