You've invested a lumpsum in a mutual fund – smart move! Now, don't just see green numbers. Learn to truly understand your investment's performance and make informed decisions.
Your fund statement shows profit, but not efficiency. Calculating helps benchmark performance, review portfolio adjustments, and plan future financial goals effectively. Understand the 'speed' of your money!
For investments under 1 year, Absolute Return shows the total percentage change from your original investment. Formula: [(Current Value - Original) / Original] * 100. Simple for a quick view!
For periods over 1 year, CAGR (Compound Annual Growth Rate) gives your average annual growth rate, smoothing out volatility. It's the standard for annualised performance. E.g., 10.68% per year.
Made top-ups or withdrawals after your initial lumpsum? CAGR won't work. XIRR (Extended Internal Rate of Return) is the pro's tool for accurate annualised returns with multiple, irregular transactions.
Market conditions, fund category/strategy, expense ratios, and your time horizon significantly impact actual returns. Equity funds, especially, need a long duration (5+ years) to show their potential.
Understanding your returns empowers better wealth management. Explore tools to see the power of compounding for your long-term goals. Visit sipplancalculator.in/sip-calculator/ today!