How To Become A Crorepati: 15x15x15

Follow this 15 x 15 x 15 rule to become a crorepati without taking big risks.
Ramalingam Kalirajan explains how.

Imagine a future where you've achieved financial freedom, where your investments have grown to make you a crorepati without requiring constant monitoring or high-risk bets.

This dream is within your reach and the key lies in a simple yet powerful strategy known as the 15 x 15 x 15 rule. By committing to this rule, you can turn disciplined savings and smart investing into substantial wealth over time.

Let's delve into how the 15 x 15 x 15 rule works and how you can leverage it to secure a prosperous financial future.

The 15 x 15 x 15 Rule: A Breakdown, Not a Breakaway

The formula is very simple:

• 15 Years: This is your investment horizon, the duration you commit to stay invested.
• 15 per cent Annual Returns: This is the expected average annual return on your investments. Sounds like a smooth ride, right?
• Rs 15,000 Monthly Investment: This is the amount you need to invest systematically through a SIP (Systematic Investment Plan).

Is a 15 per cent Annual Return a Sure Thing?

The financial market, as much as we'd like it to be a predictable paradise, operates with its own set of rules.

Historically, equity markets have delivered an average return of around 12-14 per cent. However, past performance isn't a crystal ball. Market fluctuations, economic upheavals, and unforeseen events can all impact your returns.

So, does this mean cracking the crorepati code is impossible? Not at All.

The 15 x 15 x 15 rule offers valuable insights, like:

• The Power of Compounding: Imagine a snowball rolling down a hill, gathering momentum as it goes. Regular, disciplined investments (like SIPs) allow your money to grow exponentially over time, thanks to compounding.
• Long-Term Focus: A 15-year investment horizon helps you weather market storms and smooth out returns overall. Picture yourself riding on a bumpy road in a sturdy vehicle instead of a rickety bicycle.

The Reality Check

While the rule offers a basic framework, several factors can influence the outcome:

• Market Volatility: Achieving a consistent 15 per cent annual return is challenging due to market fluctuations.
• Inflation: The purchasing power of your crore in 15 years might be different due to inflation.
• Tax Implications: Taxes can erode your returns.
• Emergency Needs: Unexpected expenses might disrupt your investment plan.

Building a Robust Investment Strategy

To increase your chances of financial success, consider these steps:

• Diversification: Spread your investments across different asset classes to manage risk.
• Regular Review: Monitor your portfolio and rebalance as needed.
• Seek Professional Advice: A financial advisor can provide personalized guidance.
• Emergency Fund: Build a financial safety net to protect your investments.
• Long-Term Perspective: Stay invested for the long term to ride out market fluctuations.
• Beyond the Rule: Building Your Personalized Investment Journey

The 15 x 15 x 15 rule is a helpful framework, but it shouldn't be your sole guide. Consider these factors to build a personalised investment strategy that reflects your unique circumstances:

• Risk Tolerance: Are you comfortable with market roller coasters, or do you prefer a more stable ride? Equity investments can be volatile, so assess your risk appetite before diving in.
• Investment Goals: Are you saving for a dream vacation, a child's education, or a comfortable retirement? Goals with different timelines may require different investment approaches. Don't use the same tools to build a sandcastle as you would a brick house.
• Asset Allocation: Spreading your eggs across different baskets for better security is a wise financial move. Diversifying your portfolio across asset classes like equity, debt, and gold can help mitigate risk and potentially enhance returns.

Limitations of the 15 x 15 x 15 Rule

While the 15 x 15 x 15 rule is a compelling strategy, it has its limitations:

• Market Volatility: Achieving a consistent 15 per cent annual return is challenging due to market fluctuations.
• Discipline Required: Consistent monthly investments over 15 years require financial discipline and stability.
• Inflation Impact: Inflation can erode the real value of the corpus accumulated over time.

Investing in mutual funds offers several advantages over other investment options:

Benefits of Investing in Mutual Funds

Investing in mutual funds offers several advantages over other investment options

Diversification

• Spreading risk: Mutual funds invest in a diversified portfolio of securities, reducing the risk associated with investing in individual stocks or bonds.
• Access to various asset classes: You can invest in a mix of equity, debt, and other asset classes through a single fund.

Professional Management

• Expert guidance: Mutual funds are managed by professional fund managers who conduct in-depth research and analysis.
• Time-saving: You can save time and effort by delegating investment decisions to experts.

Affordability

• Low investment threshold: Many mutual funds have low minimum investment amounts, making them accessible to a wide range of investors.
• Systematic Investment Plans (SIPs): You can start investing with small amounts through SIPs.

Tax Benefits

Tax deductions: Some mutual funds, such as Equity Linked Saving Schemes (ELSS), offer tax benefits under Section 80C of the Income Tax Act.

Takeaway

While the 15 x 15 x 15 rule offers a simplified path, becoming a crorepati requires a well-defined investment plan.

Consult a financial advisor to assess your unique needs and develop a personalised strategy that considers your risk tolerance, investment goals, and time horizon.

Remember, consistent investing, smart asset allocation, and a long-term focus are the key ingredients to achieving your financial dreams.

So, use the 15 x 15 x 15 rule as a stepping stone, but build your own robust investment strategy for a secure and prosperous future!

• You can ask rediffGURU Ramalingam Kalirajan your questions HERE.

Ramalingam K, an MBA in Finance, is a Certified Financial Planner. He is the Director and Chief Financial Planner at holisticinvestment, a leading financial planning and wealth management company

Disclaimer: This article is meant for information purposes only. This article and information do not constitute a distribution, an endorsement, an investment advice, an offer to buy or sell or the solicitation of an offer to buy or sell any securities/schemes or any other financial products/investment products mentioned in this article to influence the opinion or behaviour of the investors/recipients.

Any use of the information/any investment and investment related decisions of the investors/recipients are at their sole discretion and risk. Any advice herein is made on a general basis and does not take into account the specific investment objectives of the specific person or group of persons. Opinions expressed herein are subject to change without notice.