Are you patience (with irr n cagr calculation)

XIRR or CAGR more practical ?

For a layman who tries to invest, if he can gain more than Bank FD and don't lose his capital, it is already a blessing. Of course gain 1,000% is even better.

Let me share my two simple calculators which I usually use; xirr & cagr for my investment return.

From Web-search of Xirr & cagr:

1. XIRR stands for Extended Internal Rate of Return is a method to calculate returns on investments of multiple transactions at different times.

2. XIRR is an annualized form of return over a time period if the annual return is compounded.

3. XIRR is our personal rate of actual return on our investments.

Don't really understand, nevermind. We read on.


As for Cagr:

Compound annual growth rate is a business & investing specific term for the geometric progression ratio that provides a constant rate of return over the time period. 

Oops! Nevermind I show you by an example.

~~~~~

1. I use both xirr n cagr to compare my investment and to cross-check.

2. My opinion which can be subject to critics remark, I find Xirr is look good theoretically.

I need to enter the date of investment n payout, down to ddmmyyyy.

I noticed that by adjusting your dates, even by a few months, your xirr calculator can give different result.

3. Personally who can time their investment to recycle their fund so quickly? Buy-sell; then reinvest so fast within few weeks? Likely your payout will keep in our bank or "below our pillows" and earn little interest.

4. In other words, not so realistic but good indicator; especially if it helps to compare the return with our CPF-OA or SA interest rate reference.

5. Where to find the xirr calculator?

Online xirr calculator; I prefer "Vindeep xirr" app which is easy to use. Just faithfully enter your transaction, it will give you the result.

6. Cagr will be my cross-reference benchmark. It just compares initial sum n final payout over the invested period. 

Example,

$100k x (1.0??^10) = $150k. For the layman, make an estimate entry to '??' to get the answer closes to $150k; where '10' means 10-year investment period.

In this case,

100,000×[1.04138^(10)] gives $150,000.00.  

So this investment gives me a compound interest of 4.138% annually for 10-year.  


7. So is it better than SA?

For SA compounded interest over same 10-years and assume flat 4%,

$100,000×[1.04^(10)] = $148,000.

So it seems like this investment is better than putting $ into SA; if you can find one.

~~~~ 

Give yourself a pat on your shoulder. You are a patient person to read my long blog. Solid you.

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