5+15+25 SIP Formula: In how many years can Rs 5,000 monthly investment grow to over Rs 1.6 crore fund?

5+15+25 SIP Formula: Investing in mutual funds through SIP is not that difficult if you invest wisely. There are several rules or formulas for investing in MF, especially for new investors to help them understand the basic investment process. One is the formula 5+15+25. In this, you will have to invest Rs 5,000 every month regularly to build a corpus of more than Rs 1.6 crore.
Before proceeding to the 5+15+25 SIP Formula, let’s recall some basic things about SIP mutual funds.

Mutual funds are an asset class that invests money in various assets like stocks, equities and bonds on behalf of the investors. There are two types of investments in mutual funds, one-time investment/lump sum investment and monthly investment.

SIP is an investment strategy that helps investors to invest money in mutual funds as per their financial capacity. It provides investment flexibility, where investors can pause, withdraw, and increase their SIP contributions.

• Power of Compounding
• No lock-in period; investor gets to choose
• Rupee cost averaging

One can start investing in a SIP mutual fund with as low as Rs 500 per month.

There is no maximum limit for investing in SIP mutual funds. Hence, you can invest as per your capacity.

Now let’s move on to the 5+15+25 SIP formula. What is this formula, and how does it work? Let’s understand –

The 5+15+25 formula is a financial planning strategy which helps an individual to build wealth by investing in mutual funds through SIPs. According to this formula, the investors can build a corpus of Rs 1.64 crore in 25 years. Let’s see how this works.

In accordance with the formula, the “5”, “15” and “25” represent three different things:

The “5” is the monthly investment in SIP.
The “15” represents the annualised return rate.
While “25” shows the number of investment years.

Thus, following this formula, the investor will have to invest Rs 5,000 in SIP every month for 25 years, with an annual return rate of 15 per cent.

Let’s apply the 5+15+25 SIP Formula: See example

Now, let’s apply the 5+15+25 SIP formula and calculate how much corpus one can accumulate in 25 years with a 15 per cent annual interest rate:

According to the calculation, if a person invests Rs 5,000 every month in SIP for 25 years, then he/she will invest a total of Rs 15,00,000.

Since the estimated annual return is 15 per cent, the estimated capital gain in 25 years will be around Rs 1,49,20,369.

Now, after 25 years, the investor will get a total of around Rs 1,64,20,369. It is to be noted that this is the total of your initial investment and the capital gains made on that.

• Monthly Investment: Rs 5,000
• Total Investment in 25 Years: Rs 15,00,000
• Estimated Capital Gain: Rs 1,49,20,369
• Total Received: Rs 1,64,20,369