Investment Returns: CAGR, XIRR & Bond Yield
Absolute return flatters and deceives. These three calculators give you the annualised truth about your stocks, SIPs and bonds.
Why annualised return is the only fair measure
"My investment doubled" sounds great until you ask over how long. Doubling in 5 years is about 14.9% a year; doubling in 12 years is barely 6%, less than many fixed deposits. Annualising converts every investment to a common yardstick so you can compare a stock held 3 years against an FD, a fund, or inflation.
CAGR for lumpsums
Use the first tab for anything bought once and valued or sold later: a stock, a plot of land, gold, a fund lumpsum. The calculator reads the exact holding period from your two dates, so a 2 years 7 months holding is annualised precisely rather than rounded.
XIRR for SIPs
SIP money enters every month, so each instalment has a different holding period, and CAGR on the total is simply wrong. XIRR finds the single annual rate at which all your monthly outflows grow to exactly today’s value. This tool solves it numerically the way Excel does, using a bisection search on the net present value.
Bond yields, briefly
A bond bought below face value earns more than its coupon suggests. Current yield is the coupon divided by the price you pay. Yield to maturity also accounts for the capital gain or loss when the bond redeems at face value; the widely used approximation here is accurate within a few basis points for typical bonds:
Worked example: the doubling that wasn’t great
You invested ₹2 lakh in a stock in January 2019 and it is worth ₹4 lakh in January 2026. Doubling feels excellent, but the first tab shows the CAGR: 10.4% over 7 years. A boring Nifty index fund did about as well over most such windows, and several fixed-income options came close after tax. The point is not that the stock was bad; it is that annualising is the only way to know. Absolute return grows automatically with holding period, so it flatters every long-held investment.
Checking your fund app’s XIRR
Most fund platforms now display XIRR, and you can audit it here: enter your SIP amount, months invested and current value, and the figures should match within a few tenths of a percent (differences come from actual debit dates vs the same-date assumption). If your platform shows only absolute return, this tab converts it to the annual figure you can compare against an FD rate, which is the comparison that actually matters when deciding whether the fund earned its risk.
Frequently asked questions
What is a good CAGR?
Context decides. Over long periods, Indian large-cap equity has averaged roughly 11% to 13% a year, fixed deposits 6% to 7%, and inflation 5% to 6%. A CAGR below inflation means your money lost purchasing power despite growing in rupees.
Why is XIRR different from CAGR for my SIP?
CAGR assumes all money was invested on day one. In a SIP, recent instalments have had only months to grow, so lumping them together understates or overstates performance. XIRR weights every instalment by its actual time in the market.
My fund app shows absolute return. How do I get the annual figure?
Use the SIP tab: enter your monthly amount, the number of months, and the current value from the app. The XIRR shown is your true annual return, directly comparable with FD rates.
Is the bond YTM here exact?
It uses the standard approximation formula, typically accurate within a few hundredths of a percent for ordinary coupon bonds. Exact YTM requires iterating the full cash-flow equation, which matters mainly for very long or deeply discounted bonds.