The Difference Between CAGR and XIRR and Real Returns. How Much Did You Make?
64K per quarter if you invest only Rs. 10 lakh! For six years! That’s like 16% a year! (You only get 64K per quarter for 6 years, and no principal is returned at the end)
But here’s what it really is. If you are an investor looking for capital appreciation (you don’t need the cash flow) then you just put the money in, and see how much you get at the end of 6 years. The answer? 15.38 lakh. For six years, that’s less than 7%.
Oh but wait, you can reinvest the money you get! Where can you put it? Something that gives you just 8% a year. And you need to pay some tax on the money you get each quarter. That will give you a net amount of 16.45 lakh after 6 years. You put in 10 lakh. So the return is a miserable 8.65%.
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