InvestingBeginner
Absolute Return
The total percentage gain or loss on an investment, ignoring how long it took.
Detailed explanation
Absolute return answers 'how much did it grow', not 'how fast'. Without a time dimension it flatters long holding periods, which is why annualised measures such as CAGR or XIRR are used for comparison.
Formula
Absolute return = (Current value − Invested amount) / Invested amount × 100
Example
₹2,00,000 growing to ₹3,00,000 is a 50% absolute return — impressive over 3 years, ordinary over 12.
Why it matters
Marketing material often leads with absolute returns precisely because they look larger than the annualised figure.
Key points
- Always ask over what period.
- Use CAGR for lump sums and XIRR for periodic flows.
- Compare only after adjusting for inflation and tax.
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Educational content only. Definitions and examples are illustrative and are not investment, tax or legal advice.