How to measure the return on investment of a mutual fund? We have all heard about "compounding effect" and how "staying invested" helps in the long run. What we are all talking about is the return on investment . There are a few metrics that one can use to evaluate the returns on a mutual fund investment. We often use these metrics while comparing, selecting and evaluating investments. These are Absolute return, CAGR and XIRR. Ever wondered, which is the more appropriate metric for you? Let’s find out. Absolute Return The most common is the absolute return which simply shows how much the investment has grown in the period. If an investment of Rs. 10000/- is now worth Rs. 15480/-, the absolute return is Rs. 5480/- and the investment has grown by 54.8%. Wow, that's great. But is it really? Absolute returns simply considers the return from the initial investment till the present day without factoring in the period of the investment. In the above case, whether...
Your go-to guide for personal finance, behavioral finance, and smart investing. Welcome to a clutter-free space in the world of personal finance and investments. In an age of information overload, this blog simplifies the basics of money management, investing, and mutual funds — making them easy to understand for beginners and seasoned investors alike. Here, we focus not just on numbers, but on the psychology behind them. Behavioral finance plays a key role in helping you recognize common biases