Different kind of answers can be given to your question, as there is different ways of learning. One can have a very basic idea of about a company, say an FMCG company, whose products are used everyday, and he buys the company shares and then slowly comes to know through experience, how the investment works, how, why and when the price moves, up or down, or consolidates, what market thinks about the business. Or one can learn the nitty gritty, the important aspects and take the step forward. Or one can have a good understanding about everything in a standard way, the business, the valuation, future outlook, competition, management commentary, and as such can start with a decent allocation, more than a tracking position. Or one can deep dive, spend time and have a detailed and nuanced understanding of the business and then invest. Choose whichever suits you psychologically and financially.
If you can afford to lose your entire tracking positions, all of them, then I would say to go forward, provided if you have some understanding of the business. Or if there exist companies in the market from your profession, you can start with them, as you know what happens inside the company.
I am still learning, so take my 2 cents with a pinch of salt.
Q1> Does the company do the corporate announcements(or something related) to the nse or bse website for any for below of the cases
When the property is raided by Income tax department
When the property is raided by the Local development authority like LDA or DDA due to land disputes?
When the property is affected due to fire or water or earthquake
Labour strike in the property
Cyber security attack
Q2> If yes, in how many days does the company are legally bound to do the corporate filings after the incident occurred?
Q3> Is it mandatory for all companies to do it irrespective of market cap?
Q4> If the incident that occurred is in news like being raided by land authority, how to seek clarification if they are not filings anything to nse or bse?
Q5> Are they bound to reply if I ask them on their investor relations if I am not a share holder?
I have a very basic query regarding the CAGR returns shown by mutual funds or stock returns shown on screener by different stocks.
Normally an Investor
Invest at different points of time in mutual funds and shares. May be when he gets a salary or some profits or some bonus at any point of time whenever he gets money.
He holds such investments for different time periods , depending on his personal reasons and needs,
He can withdraw partially or fully at different time periods , may be regularly or even irregularly as and when reuired.
now when we see CAGR returns of mutual funds or CAGR returns of stocks on screener , these returns doesnot incorporate such inflows and outflows of funds.
Even XIRR returns of mutual funds may be pertinent to their own purchase and redemption of cashflow of that particular AMC. Their XIRR will also not reflect the XIRR return of individual investors with his own cash inflow and ouflow.
So when an Investor at year end or at particular time period sits and calculate his own XIRR, taking into consideration his own cash inflow and outflowā¦Then how can he compare his individual XIRR with that of any Fundās CAGR or XIRR? or how it is comparable to particular stock CAGR?
And if these things are not comparable then how an investor can reach a conclusion whether he is doing better or worse compared to particular funds?
because if such comparison is not practically possible then there is no way to know whether such hardwork of picking stocks and such study is really worthwhile or not from Returns point of view. ( I am not talking of knowledge gained and happiness derived from such research activities).
i am clearly talking from point of view of returns and comparing it with other alternative arrangements to know if we are doing better job than themā¦so we can keep doing it
I donāt think we can calculate a fundās XIRR on our own, as the dates on which the fund buys and sells are not available to us, not to mention the cash the fund has parked in some instruments and a return they get on this cash. We can obviously calculate our XIRR.
And for comparing see if this helps. The video although is about calculating SIP returns, I think it can provide some insight to you, watch it till 9 minutes. I calculate XIRR but donāt do any comparison.
Rather, my point of discussion start where this video ends.
i calculated my XIRR, by downloading the Trade book file from zerodha console and then in Excel sheet, I represented my investments as negative and my initial value of portfolio as negative and final value as positive. So from 5th July 2022 till yesterday 4th July 2023, my XIRR came as 26%.
now when i compared this with last 1 year UTI Nifty 50 Index fund, they are showing 1 year return as 23.29% while SBI small cap Fund showing 1 year return as 26 % ā¦
But I know that my days of investments , my cash inflows and even outflows ( as i sold some shares in between) are different compared to UTI nifty 50 index fund and SBI small cap fund. So definately I cannot compare my XIRR with them. And if that is the case, then how do i value my efforts at investing, being superior or inferior to them? That is my question
P.S, Funds for comparison are just for examples. I am aware that my portfolio constituents may warrant different funds for Benchmark
I donāt know the nuanced mathematical differences between CAGR and XIRR, but I do know that if we are not allocating the funds in one go and are also not withdrawing them once, XIRR is the correct calculation, and as such, if my XIRR is higher than the CAGR, even if it is not the correct option, I am happy. How much difference of oneās XIRR and a fundās CAGR should be considered to make one happy, or how much of a difference is worth the effort is subjective.
You can also compare the total return of your PF per calendar year with funds, because fundsā calendar returns are also given.
I guess the broad point can be, to see how the overall financial assets are growing with time, in relation to the market conditions, if the allocation to market linked products is high.
I think we can look at it in 2 different ways, one is to have a number in mind, a corpus number and see if we are going towards that number, or the other way, no number as such, and we are focused on getting a return which we think is good, in itself is good, or when compared to other products.
CAGR is applicable when you invest one time and thats itā¦no additions or withdrawals in between. Or regular frequency withdrawals or additions.
XIRR is when additions as well as withdrawals are irregulars , at any point of time. Thats the reason, XIRR formula of excel need Dates as an input.
Now, when you are comparing XIRR with CAGR, just a normal comparison of higher and lower will not give you correct picture. You need to see you XIRR as in when and for how much period you invested and how much percentage of your portfolio as an amount was in the market or out of the market , meaning inside compounding machine or out of compounding machine. and this data will be different for each investor.
I mentioned CAGR of funds or calendar returns are XIRR of the funds are not available, and I donāt compare even if they are available personally, one reason being after I invest, what if the funds stop giving such return, started with active MF of course, moved to index ETFs, but mostly for trading opportunities and not as long term investment.
Also, given the maturity of our market, despite new IPOs, the chance of getting a 15% return YoY for extended periods of time is almost not going to happen. So not entirely mathematical, but with experience etc non quantifiable things, I think my XIRR is more than what any fund can give me if I invested them on the same dates and the same amount. A fund from Quant or some other AMC can give a stellar return for a couple of years, but I want sustainability, as we all do.
And even my XIRR calculation is tricky, I get 2 or even 3 XIRR values depending upon how I take the duration of all the trades into consideration.
And for your precise question, you can contact the channel owner of the video via his website, as I believe you know who he is, and if you happen to have a conversation, you can post the summary. I would like to know this from a mathematical perspective.
@Mudit.Kushalvardhan What you raise is an interesting question. How can we reliably compare our portfolio returns with a benchmark?
This is what Iām currently thinking of: Once we chose a benchmark we prefer, say Nifty 50, whenever we add a stock to the portfolio, we shall have a parallel entry as if we purchsed Nifty 50 approximately for the same value. Same goes for selling. These double entries, one actual and another fictitious benchmark transaction, will help us arrive at two comparable returns.
We could extend this by more parallel entries for other benchmarks, say Nifty 100, or even mix of them, like 70% sensex + 30% Nasdaq.
Apologies if this is very basic or already discussed.
@Mudit.Kushalvardhan Going back to your original question, the point is very much valid. The comparison is never apples to apples, but that is the best we have. Note that even the performances of two fund managers may not be exactly comparable, since they are also bound by their own constraints of inflows and redemptions, differing scheme objectives, benchmarks, etc. Even luck and other random variables matter. Over long periods of time, one can say this ānoiseā cancels out, but shorter the duration, more meaningless the comparison. That is why one should not attach too much importance to these comparisons.
More importantly, I believe why does an individual investor even need to compare? At best, he can compare with his own opportunity cost, thatās enough. Serious investing takes so much time that unless one really enjoys the process, it is not worth doing it. One can invest in a mutual fund and free up time for doing something else.
Hello All,
I have been struggling to find a proper website to calculate my XIRR as CAGR doesnāt help me as I add money on a monthly basis, and after trying to do it on my own for a few months in Excel I lost patience. I came across ValueResearch and their Portfolio tracker.
As of now I have uploaded FY23 and April-June '23 CAS statements from NSDL.
The number that is reflecting here is it the XIRR being calculated?
Thanks just uploaded my files. The numbers tally I could not locate the option to compare pf with index but yeah I could upload my entire 2.5 yrs of Investments.
There is another way to do it by uploading your trade files in excel and then doing some.modifications to arrive at it. But i cant upload it here as its screenshot of twitter posts
@Worldlywiseinvestors Recently finished reading the book āWhat I learned about investing from Darwinā by Pulak Prasad. Awesome book. I liked it so muchā¦its at high level like Intelligent Investor and Howard Markās Most Important Things.
My query about it is as follows :-
I totally agree with Buying good companies and also becoming permanent owners by never selling.
But in case of buying, as they have said, that they buy only when a major setback to market happens, like in their case they invested during Global Financial Crisis in 2008, then in Europe crisis in 2011 and then Covid crisis in 2020ā¦and they really got good quality companies at very low valuations.
But in case of a normal investor like us, we have regular income, every month and we need to deploy this capital regularly. We dont mind, never selling, but while buying, we need to be regular. We cant buy only 3 times in 14 years. So where is the disconnect about my understanding? Am i on wrong understanding path?
I could not locate the option to compare pf with index but yeah I could upload my entire 2.5 yrs of Investments.