Is your asset really outperforming? The basic return math you should know

[gail76]

@nischansr I am failing to understand why you are mixing two completely different things.

One is using rolling returns as a measure of comparison between two financial instruments. And the second how you plan to invest in those two instruments.

If you plan to use sip then you need to use that to stimulate return for any period - be it trailing return or rolling return. Importance of that is what op had shown in his calculation. And if you do sip you need to use xirr. I really don't care what you use for comparison but you have to consider what you are planning do.

 

[nischansr]

@gail76 Why/where do you think I'm mixing up anything?

 

[dame]

@crixus123 Yeah. Rolling returns is only to compare two investment avenues. Your transaction pattern in the past is unique to you and won't remain the same in the future..

 

[zashmaster]

@crixus123 I want to make an important, related point. It is essential that any investor sets up a mechanism to track their entire portfolio and look at the numbers. You may not look at the numbers every day - actually you should not, but you should be able to get this info at any time.

 

[resjudicata]

@zashmaster Is there any tool or excel that you know of? Please share would be of great help.

 

[logant2222]

@crixus123 When you are researching rolling/SIP returns make sense to compare and select fund.

When you have started investing then only equivalent portfolio (against relevant index) analysis makes sense.

 

[grateful266]

@crixus123 @crixus123

To summarize:

• buy more when asset is undervalued or underperforming another asset

While not your main point and maybe I have understood you incorrectly, but you are essentially saying "time the market"? Buying more when the asset is undervalued would mean avoid SIPs and try to keep cash reserve when the Nifty index is down 1-2% and lumpsum the amount. Am I missing something?

 

[resjudicata]

@crixus123 Very informative thread, thanks.

Clearly, if someone had invested a lumpsum amount in Axis Bluechip direct growth on 1st Jan 2019; they'd have done better than investing same amount in UTI Nifty Index fund on

that same day. No question on that.

Sir you once made a thread comparing sip vs lumpsum returns for few funds. Can you please share the link of the same? Not able to find it. @crixus123

 

[bible2]

@crixus123 Money control shows the returns of sip also. One can compare with it

 

[myosotis]

@crixus123 Great, concise and to the point post, kudos.

 

[a_bit_of_reason]

@crixus123 To compare one uneven periodic investment portfolio with Market returns one can make use of XIRR excel function.
The XIRR picture with same amount in one funds/shares/smallcases and say UTI Nifty 50 index fund will be more realistic and maybe used for evaluation purposes.