Wealth creation is a marathon and not a sprint. The 15*15*15 rule shows how true this is. There are no shortcuts to financial freedom or a comfortable retirement. However, there are guidelines and rules that can help you create wealth for the future.
One of these useful mutual funds SIP related rules is the 15*15*15* rule. It can help you generate up to ₹1 Cr in 15 years with the magic of compounding.
Before we get into what the 15*15*15* rule is, it would be useful to know how compounding works.
What Is Compounding?
In investments, compounding means that interest is calculated on the principal amount and the interest already earned. Simply put, you’ll earn interest on interest.
This leads us to one of the most popular phrases in mutual fund and stock investments, ‘the magic of compounding’
What Is The Magic Of Compounding?
The magic of compounding is not actually magic - it’s simple math. But the utility of compound interest is best represented through the value of our investments over time. Let’s take a look at an example to understand this.
Value after 1 year
Value after 2 years
Value after 3 years
Value after 4 years
Value after 5 years
The magic of compounding is clear from the above example. This is the main reason why investors tend to prefer stocks, mutual funds and other such assets for the long term.
Shriram is a Content Marketer at Cube Wealth, the Financial Freedom App with a smart Perfect Portfolio Planner. He has developed cutting edge IT products for over 2 years before turning to his passion for the written word. Shriram’s love for philosophy, product development, and empowering people through quality content is what got him to Cube Wealth.
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