![]() In below sections, we have covered when to use all these ways of calculating returns in mutual funds. It takes into consideration different dates of buying and selling of mutual funds which is the perfect example in SIP, in which case absolute returns or CAGR is of less use for us. ![]() ![]() We use XIRR in this case of SIP or continuous buying or selling of mutual funds. Particularly, when we invest via SIP in mutual funds or stocks ( which most of us do), or when there is continuous buying of mutual funds in different months of the year and occasional selling as well, we cannot use absolute returns or CAGR returns. Why XIRR? Why not absolute returns or CAGR formula? XIRR or Extended Internal Rate of Return is a method to calculate returns on your mutual funds.
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