CAGR vs XIRR vs Absolute Return | Calculation with example

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Let’s say you invested Rs 5 lakh in mutual funds 3 years ago and today the value of your investment is 7.5 lakh. Now, if I ask you how much return you have generated? Then 1st answer could be the absolute return that we learned in our school where you can say that since I invested 5 lakh and my value is now 7.5 lakh so I made a profit of 2.5 lakh. And in terms of absolute percent, it is 50%. That’s pretty simple.
But, if I ask you, what is the annual return you have made on your investment? Now, that gets a bit tricky. And to calculate that, you need to know CAGR return.
Next, if I ask you, instead of investing 5 lakh as a lump sum, what would be the return if you invested the money in the form of SIP? In that case, your CAGR return won't work. That’s where you need to learn the XIRR return.
In this video, I have shown the calculatetion to understand the difference between absolute return, cagr and xirr return.
#cagr #xirr #mutualfundreturn #mutualfund #mutualfundreturncalculattion #financialliteracy

[@kartheekvaranasi]

No one explained this in so simple language with examples...simply loved it...:)

[@v.prasath3130]

Really wonderful presentation. But have a simple doubt! As a common man, 50% which is absolute return seems more understanble than XIRR! CAGR is useful in case of 1time investment. But for multiple investments , when we look at XIRR, and it is 74%(as in the example) what sense do we get from it? In what way we can uss XIRR or IRR as parameter to choose funds? Thank you

[@puneet4ever]

Good way to explain..very nice video. One liner..Simple way to understand formula and it's use Absolute Returns: Single investment, One year CAGR: Single investment , Multiple years XIRR: Multiple investment, Multiple years.

[@Archanakarthikeyan]

Hi Sahil, I've been trying to get my head around CAGR and XIRR for a while now through a lot of research. Your video explains it super quickly and effectively. You have a gift for simplifying complex concepts. Thank you for sharing your knowledge.

[@elizershadap6393]

Thank you so much sir. Priceless information.

[@rajuyvu472]

Sir plz tell me incaseof Profits is XIRR Is always more than CAGR?

[@srirambalraj8]

Wow, As usual learning something new with your video. Never heard of that excel function on 6:29.

[@SahilBhadviya]

Thank you Sri Ram!

[@Nekomajin]

Thank you for this explanation!

[@danishcherapparambil]

Good informative am from kerala i have been searching for this in malayalam and finally i got it thank u

[@rohitnayar0267]

Splendid video 👌

[@shakthis_view]

Nice explanation 👌👌 buddy

[@rubyjoseph8885]

It helps me understand the different, thank u 🙏

[@jackr6727]

very well explained, thanks

[@karthiksaptharishi6136]

Good job Sahil.. keep rocking mate!! Just note that it would be useful if you also explained how to interpret the XIRR value. Thanks

[@rushangdoshi2772]

Really informative brother

[@raghuraghavendra1889]

Thanks for the video Sir. 1. Is it required the SIP Date to be same? 2. Is it required the SIP Amount to be same? 3. The Months where I wasn't able to do SIP has to be entered as zero compulsoryly for calculation or can I skip entering the Date itself wherein I haven't Invested 4. Can to Lum-sum Investment & the SIP Investments Combined Returns can be calculated? If so how? plz made a video on this

[@arena-DreamGoalAdvisor]

Great sir .Thank you...

[@shahkavish]

Brilliant Sahil

[@josejedavoor]

Nice presentation, I think it is useful to me

[@debatradas1597]

thank you so much

[@vijayramaniah4670]

Thank you.

[@praveenkumar-nh1eo]

Great video

[@billubakra0007]

Thank you Sir. Learning a lot. Can you please explain Annualised Yield and IRR too in a video?

[@joinwithbillionaire9042]

Wonderful presentation Sir💝 But I'm really waiting for your Share Analysis ( # Add Eid parry, Orient Electric in your List Sir )

[@neilsanghavi8664]

Thank you

[@vkrish04]

Hey Sahil, its a great video thanks . Could you please create a video on how to calculate the long term capital gains tax on SIP mutual funds? thanks

[@tdpatel1990]

Hi Sahil, love your videos and Quora answers. Please keep up the good work. Currently reading “little book of common sense investment” and thinking to later buy your course from your website. Cheers from Indian in germany. A request if you consider, can you please make a video of different thumb rules of distributing personal monthly savings? For example, emergency fund, ETF, real estate, etc.

[@SahilBhadviya]

Thank you Tirth! I will consider your request. Please go ahead with course. You will certainly learn a lot of things.

[@AB-me8jf]

@@SahilBhadviya bu For same values I am getting 67.93%

[@AB-me8jf]

Xirr 67.93%

[@santhoshsomu6711]

Can you please share this google sheet?

[@phanitej3122]

Your channel will grow like hot cakes in future and people will take your examples.

[@flutedilse4264]

We see annualized return in SIP WHAT is it n how is it calculated?

[@hariharans7894]

Sir, now I have come to know about CAGR calculation. But how to derive investment value if CAGR is mentioned. Kindly explain.

[@santanughosh2821]

Hi Sahil, please explain how do I calculate XIRR for an investment of 15k per month for 5 years in an ULIP of kotak life.

[@abhisheksolanki2241]

How do I calculate absolute return where I have some XIRR over a year?

[@seepanaharikeshava6418]

How do we calculate CAGR if we have days instead of Years?

[@jackr6727]

Say suppose if I have made SIP investment for 1 year. Next year I do not do any investment. Which parameter do I use to find my year per year return? CAGR or Absolute or XIRR?

[@kishansaria8179]

Sir, I want to get XIRR for one of the monthly SIP from the list of mutual funds maintained by me. Please let know how to get the XIRR from this filtered list in google sheet.

[@sankararaorongali3116]

Hi bro Your explanation is really amazing. Could you please give your appointment. Thankyou so much

[@gyankiduniya8992]

Hey sir thank you can I get this excel

[@rajeevramakamath]

good

[@shaun3008]

Why is XIRR important as a measure of return ?

[@ytstockmarketjaydeeprabari976]

Didn't understand XIRR returns 😰

[@jayaganthan1]

What does 72% denote in XIRR? Does that mean I made a 72% return on my investment ?

[@SahilBhadviya]

That means 72% return on yearly basis for SIP investment made during April to November. This is real data. Investors got rewarded handsomely when invested post March crash.

[@sreejx]

@@SahilBhadviya hey its still hard to interpret this value, as an investor I will be interested in what I get at the end of the investment so I would check the absolute return and if I want to compare it with any other investments like PF or Fixed deposits I would calculate the annualized returns using CAGR ...then where is this XIRR helping to make a decision.

[@sourabhk2373]

Doesn't explain well. You teach like a school teacher who is just asking us to mug the formula. Now reasoning as to how the CAGR formula came about.....