I don’t 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 one’s XIRR and a fund’s 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 funds’ 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.
My thoughts.
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