Absolute Returns v/s XIRR

When investors evaluate any investment, the first number they usually think of is the “profit”. What extra have we earned? Naturally, this feels exciting. But the important question is: does this number truly reflect how well your money has worked for you? This is where investors must understand the difference between absolute returns and XIRR. This difference is important across asset classes - whether it is a stocks portfolio, mutual funds portfolio, insurance product, LIC plan, real...

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When investors evaluate any investment, the first number they usually think of is the “profit”. What extra have we earned? Naturally, this feels exciting. But the important question is: does this number truly reflect how well your money has worked for you? This is where investors must understand the difference between absolute returns and XIRR. This difference is important across asset classes - whether it is a stocks portfolio, mutual funds portfolio, insurance product, LIC plan, real estate, or any other investment product. Absolute Returns Absolute return is the simplest (hence, misleading) way of measuring profit. It only tells you how much your investment has grown compared to the amount invested. For example, if you bought a property for ₹1 crore and its value became ₹2 crore, your absolute return is 100%. You invested ₹1 crore and made a profit of ₹1 crore. But this number does not tell the full story. The more important question is: how much time did it take? If the same property doubled in five years, it would be excellent. But if it doubled over ten years, the annual return is much lower. In fact, ₹1 crore becoming ₹2 crore over ten years roughly translates to around 7% annualised return. Suddenly, the same 100% absolute return does not look as impressive. XIRR Importance XIRR stands for Extended Internal Rate of Return. It measures the actual annualised return of your investment, especially when money is invested or withdrawn at different points of time. In stocks, XIRR helps measure multiple buy and sell transactions. In mutual funds, it helps measure SIPs, lump sum investments, switches, and redemptions. In insurance and LIC plans, it helps understand the real return after considering premiums paid over the years and the maturity value. In real estate, it helps compare the final value with the purchase price, holding period, and multiple cash flows. This happens very often in real life, across multiple asset classes - multiple entries and exits of money. In such cases, absolute return can become misleading because it ignores timing. XIRR considers three important things: how much you invested, when you invested, and what the current value is. It gives a more realistic picture of how efficiently your money has grown. Real Purpose The real purpose is to beat inflation, grow net worth, create wealth, and achieve financial goals. If inflation is around 6% to 7%, your investments should ideally generate returns above that. If we also consider lifestyle inflation, the required return may be even higher. Education, healthcare, housing, travel, and daily expenses are all becoming costlier over time. Therefore, do not overestimate returns by looking only at absolute numbers. Absolute returns may make you feel good, but XIRR tells you the truth. For your wealth creation journey, XIRR is one of the most important numbers to track. It tells you whether your money is truly working hard, whether your portfolio is beating inflation, and whether your financial plan is on the right track. (The author is Chartered Accountant and CFA (USA). Financial advisor. Vies personal. He could be reached on 9833133605)

Cultural Collapse

Correspondent
Oct 12, 2025
2 min read

When the custodians of culture become its gravediggers, decline is inevitable. The Asiatic Society of Mumbai (ASM), the city’s 221-year-old institution housed in the stately Town Hall on the steps of Horniman Circle, was once a citadel of knowledge, a hub of learning that connected India to the intellectual revolutions of the world. Today, it stands as a monument to neglect, wracked by infighting, financial collapse and administrative paralysis.

What began as an assembly of scholars in 1804, preserving treasures such as one of two known original copies of Dante’s Divine Comedy, has devolved into a sorry theatre of mismanagement. The Society, which boasts a membership of nearly 3,000, now barely sees 150 active participants. Its elections have been annulled by the charity commissioner, its finances are in shambles, and its leadership seems more intent on clinging to office than rescuing the institution from ruin. The current president, lauded as the first woman to lead the ASM, is at the end of her six-year term but even her departure is marred by controversy. Elections that were supposed to usher in a new committee have been declared illegal. The Society drifts leaderless, yet refuses to hold fresh elections.

At the heart of this crisis lies financial rot. The ASM has been bleeding money for years, losing nearly Rs. 1 crore annually. It survives on erratic grants from the state and central governments, but its leadership has failed to secure even the most basic funding assurances. Officials in the Brihanmumbai Municipal Corporation recount how the Society’s office bearers were indifferent when asked to follow up for additional grants. The result is a hand-to-mouth existence where even staff salaries are uncertain, and endowment funds meant for specific purposes are reportedly being diverted to keep the lights on.

The institution requires at least Rs. 3 crore annually to operate smoothly, yet no one seems capable or willing to fight for it. Successive committees have failed to lobby for the long-promised ‘Institute of National Importance’ status, which would have secured central funding and recognition. Instead, the management frittered away limited resources on wasteful projects.

Of the sanctioned 45 staff positions, barely 25 are filled. Crucial posts of the Librarian, Deputy Librarian and Archivist remain vacant. Many employees still draw salaries based on the 6th Pay Commission, eight years after the 7th became the standard. It is no surprise that preservation work has slowed to a crawl, leaving 3,000 manuscripts and 280,000 rare books vulnerable to deterioration.

If the Society’s founders, who envisioned it as a beacon of Oriental and Western scholarship, could see it today, they would be aghast.

Saving the ASM demands a ruthless cleaning-up. The Society must be pulled from the grip of aging elites who treat it as a private club rather than a public trust. In a city that prides itself on heritage, it is shameful that one of its greatest cultural assets teeters on the brink of oblivion.

Absolute Returns v/s XIRR

Cultural Collapse

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