Decoding your investment gains can be tricky. From Absolute to XIRR, learn the right way to measure your mutual fund's true performance!
Your total gain or loss, simple snapshot! Use for investments held less than a year. It's a quick view, but doesn't factor in time.
Compounded Annual Growth Rate (CAGR) shows average yearly growth for lump sums >1 year. It's how funds show long-term efficiency. Essential for comparisons!
For Systematic Investment Plans (SIPs) or irregular investments, XIRR (Extended Internal Rate of Return) is key. It accurately annualises returns, accounting for each payment's timing.
Don't forget expense ratios, exit loads, and taxes! These deductions reduce your *actual* take-home returns. Plan for them for a realistic financial picture.
Never confuse Absolute with Annualised Returns. Always factor in fees & taxes. Use XIRR for SIPs, not simple absolute. Compare funds within the same category.
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