Demystifying the numbers behind your investments.
First-time investor? Don't feel overwhelmed by percentages like Absolute, CAGR, XIRR. Understanding returns is key to tracking your money's growth and achieving your financial goals. Let's simplify it!
Absolute Returns give a snapshot for <1 year. Example: ₹50k to ₹56k in 8 months is 12%. CAGR (Compounded Annual Growth Rate) is for >1 year, showing annual growth with compounding. This is the real long-term picture!
For Systematic Investment Plans (SIPs) with multiple investments over time, Absolute & CAGR fall short. XIRR (Extended Internal Rate of Return) accurately calculates your annualised return, considering all transaction dates & amounts. Pros use this!
Don't forget fund costs! The Expense Ratio is an annual management fee adjusted daily from NAV. An Exit Load is a penalty for early withdrawals. These reduce your actual take-home gains. Always check!
Your gross returns aren't your final take. Short-Term Capital Gains (STCG) are taxed differently than Long-Term Capital Gains (LTCG) based on holding period (12/36 months) and fund type. Always consider post-tax returns!
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