SIP Calculator: In the world of personal finance, there's a mathematical formula—4x15x20—that can easily make you a millionaire. Now, you might ask, "Is this magic?" Experts say, "No, this isn't magic, but rather a smart investment strategy. It can help you turn small amounts into a fund worth crores over time." The question now is, what exactly is this formula, and how does it work? Let's understand.

What is the 4x15x20 formula?
The 4x15x20 formula is typically used in mutual fund SIPs (Systematic Investment Plans). You can invest small amounts to build a large fund. This formula also requires annual steps. Let's first understand the 4x15x20 formula.

The 4 in 4x15x20 equals ₹4,000 per month. 15 means increasing your corpus by 15% every year. And 20 means 20 years. Simply put, you'll need to start a SIP of ₹4,000 per month for 20 years. Each year, you'll need to increase your SIP amount by 15%. Let's understand this with an example:

Suppose you start a SIP of ₹4,000 per month. The next year, you'll need to increase the amount by 15%, to ₹4,600 per month. At the end of the second year, you'll need to deposit ₹5,290. This process continues for 20 years.

Understand this through calculations:

Monthly SIP (starting year) – ₹4,000
Investment period – 20 years (240 months)
Annual return – 12%
Step-up (annual increase in SIP) – 15%
Total investment (after 20 years) – ₹49,17,120
Total return – ₹8,28,67,252 (estimated)
Total profit – ₹7,79,50,132 (estimated)
 

That is, here the annual step-up You'll need to deposit a total of ₹49,17,120. At an estimated annual return of 12%, you'll receive a total fund of ₹82.8 million (₹82.8 million), resulting in a net profit of ₹77.9 million (₹50,132).