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How to Start Investing: Understanding the Basics of Financial Markets

Information

Moneyexcel Editor

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April 27, 2026

Starting to invest for the first time can feel like a big step. Many beginners are unsure where to begin or which market to choose. However, investing becomes much easier when you understand the basic principles behind financial markets.

Financial markets are places where assets are bought and sold. These assets include stocks, currencies, commodities, and indices. Prices in these markets change constantly based on economic data, global events, and investor expectations.

One of the first things beginners should learn is that each market behaves differently. The forex market focuses on currency pairs and is influenced by interest rates and economic indicators. Stock markets focus on companies and their performance. Commodities depend on supply and demand factors such as production and global consumption.

Understanding these differences helps investors decide where to start.

Another key concept is diversification. Instead of investing all your money in one asset, it is often better to spread investments across different markets. This reduces risk because losses in one area may be balanced by gains in another.

For example, an investor may choose to combine currencies, commodities, and indices. This creates a more balanced approach and reduces exposure to a single market.

Analysis is also an important part of investing. There are two main types of analysis: technical and fundamental. Technical analysis focuses on price charts and patterns, while fundamental analysis focuses on economic data and financial information.

Both approaches have their advantages. Many traders combine them to get a clearer view of the market.

Beginners should also understand the importance of risk management. No investment is risk-free. Markets can move unexpectedly, and losses are part of the process. Managing risk means controlling how much you invest and avoiding decisions based on emotion.

Access to the right tools can make learning easier. Many beginners start by using an online trading platform that provides access to different markets such as forex, commodities, and indices in one place. Platforms like ScoreCM help users observe real market movements and gain practical experience while learning.

Starting small is also a smart approach. Instead of investing large amounts immediately, beginners can begin with smaller positions while learning how markets work.

Patience is another important factor. Investing is not about making quick profits. It is a long-term process that requires discipline and consistency.

Beginners should also avoid following trends without understanding them. Just because a market is moving does not mean it is the right time to enter. Understanding why a market is moving is more important than simply reacting to it.

Over time, investors who focus on learning and improving their understanding build confidence. They become more comfortable with market movements and make better decisions.

Investing is not about predicting the future perfectly. It is about making informed decisions based on available information and managing risk effectively.

By understanding the basics of financial markets, beginners can build a strong foundation and approach investing with greater confidence and control.

NPS Calculator – How to Calculate Your Retirement Corpus?

Retirement

Shitanshu Kapadia

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April 24, 2026

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NPS is a popular retirement planning scheme. The NPS calculator is a tool that helps you in deciding your retirement planning corpus. Retirement Planning is one of the most important things when it comes to financial planning, yet many people ignore it. Knowing your retirement corpus is important in finding regular monthly income for the rest of your life after retirement. If you are investing money in NPS for your retirement, this post is for you. In this post, we will learn about NPS Calculator.

The National Pension System, or NPS, is now a go-to option for building your retirement savings. Launched by the Government of India, it’s a simple, low-cost way to set aside money for life after work. Over time, more and more Indians are choosing NPS to secure their future.

If you really want to get the most out of this scheme, the NPS calculator is a must-have. It gives you a clear look at how much you could actually save for retirement. When you put in contributions regularly throughout your career and let compounding do its thing, your savings can really grow. That’s how you end up with enough for a comfortable, stress-free retirement. Tools like the NPS Calculator make it much easier to figure out how much to invest, what kind of retirement fund you’ll end up with, and the pension you can expect down the road.

National Pension System (NPS)

The National Pension Scheme is a pension scheme that has been introduced by the government as a voluntary savings scheme that aims at providing a secure source of funds for individuals after their retirement.

NPS is made mandatory for employees of Central Government who started working on or after 01/01/2004. As for the voluntary NPS, it is open to any citizen of India, whether living in India or abroad, who falls between the ages of 18 and 70 years.

NPS Features

Flexibility – With NPS, one is free to make their own contributions depending on their ability and their financial goals. One can make contributions at intervals of one month, three months, or a year. There is the freedom of investing in equities, corporate bonds, and government securities.

Tax Benefits – Investment in NPS is eligible for deductions under Sections 80C and 80CCD(1B) of the Income Tax Act, which makes it a good choice for people seeking to save taxes. Deductions of up to Rs 1.5 lakh and Rs 50,000 are available under these two sections.

Asset Class Selection – NPS offers asset class selection. One can select percentage of investment in equity, corporate bonds and government securities. This selection can be auto age based or active (self-managed) based.

Market-linked Growth – The investments made by the National Pension Scheme enjoy market linked returns which enable them to grow at a higher rate than any other conventional fixed income investment scheme.

Annuity Purchase and Withdrawal – At the time of NPS maturity, you can withdraw up to 60 percent of your savings as a lump sum amount, while the rest will be used to buy annuity for a consistent flow of money post-retirement. There are also options available in NPS to withdraw partial savings for educational, medical, or housing purposes.

All of the above attributes render NPS a perfect option for saving enough money for your old age needs.

How NPS Helps Build a Retirement Corpus

Constructing a retirement corpus requires consistent saving habits, appropriate asset allocation, and harnessing the power of compounding. How does NPS make this possible?

Systematic Saving: Systematic savings make up the first requirement for constructing a retirement corpus. With NPS, one can save as less as Rs 500 every month.
Compounding Effect: Compounding effect is at play here because in NPS, one earns from returns which are further invested.
Asset Allocation: Based on risk profile, one may choose to invest in stocks, bonds, or govt securities, maximizing the potential gain from his/her corpus.
Long-term Investing Period: As one may continue to stay invested until the age of 60 years or beyond in NPS, there is enough time available to build a retirement corpus.

The power of compounding holds the key to constructing a retirement corpus through NPS. By investing early and saving consistently, one can build up his/her corpus effectively.

For instance, Mr Ramesh is 30 years old and has a retirement age of 60 years, which allows an investment horizon of 30 years. Let us assume the expected rate of return is 8% p.a.

Calculation: Using an NPS Calculator, Ramesh’s total contributions over 30 years will be:Rs 5,000 × 12 months × 30 years = Rs 18,00,000

At an expected annual return of 8%, the power of compounding will grow his corpus to approximately Rs 74.4 lakh by the age of 60.

Upon retirement, Ramesh opts to use 40% of his corpus for an annuity plan (a mandatory NPS rule). This leaves him with:

Lump Sum Withdrawal: Rs 44.6 lakh (60% of the corpus)
Annuity Corpus: Rs 29.8 lakh (40% of the corpus)

Assuming an annuity rate of 6%, Ramesh will receive a monthly pension of Rs 14,900 in addition to his lump sum withdrawal.

Why This Works:

Regular monthly contributions ensure consistent growth
Returns are reinvested, exponentially increasing the corpus over time
Contributions and withdrawals are tax-efficient, maximising savings

Starting early, using the advantages offered by NPS, Ramesh has been able to create a large corpus and secure his financial future. This clearly shows that NPS is indeed a dependable tool for meeting one’s retirement needs.

By utilizing the advantages, an individual can create a large corpus that will serve him well after retirement.

What Is the NPS Calculator?

NPS Calculator is an online tool used to determine your maturity corpus and the value of your pension. The NPS calculator is provided by the NPS Trust and makes it easier for you to calculate the complicated calculations involved in retirement planning. Using the NPS calculator will enable you to:

See how well your money grows towards retirement
Calculate your monthly pension depending on the annuity choice you make
Plan your contribution for a specific maturity corpus amount

The calculator factors in key variables such as your age, contribution amount, investment duration, and expected returns to provide accurate estimates, making it a critical component of retirement planning.

How to Use the NPS Calculator

It is easy to use the NPS calculator. Here is a step-by-step process that you can follow to calculate your retirement corpus:

Step 1: Open NPS Calculator

Navigate to www.npstrust.org.in, which is the official site for NPS Trust, and click on NPS calculator.

Step 2: Provide Personal Information

Supply personal information such as:

Current Age: This helps in determining the tenure for making investments before your retirement
Retirement Age: By default, the retirement age is 60, although this can be extended up to 75 years

Step 3: Provide Contribution Information

Supply expected annual/monthly contributions. Make sure that your contributions are according to your financial ability.

Step 4: Set Investment Return Rate

Set the expected annual return rate from your investments. NPS provides return rates based on equity, bonds, and government securities.

Step 5: Choose Annuity

Choose the annuity purchase percentage. The minimum required percentage of the corpus that should be used to purchase an annuity is 40%.

Step 6: Set Annuitization Return Rate

The rate of return from the annuity should also be determined.

Step 7: Click Calculate

After setting all the above factors, click on ‘Calculate’. The results provided include:

Estimate Corpus: The savings accumulated at the time of maturity
Monthly Pension Amount: Based on the percentage used for annuity purchase and the set return rate.

Example Scenarios

To illustrate how the NPS calculator works, let’s consider three example scenarios:

Scenario 1: Moderate Contributions and Returns

Current Age: 30
Retirement Age: 60
Monthly Contribution: INR 5,000
Expected Return: 9% annually
Annuity Allocation: 40%
Annuity Return Rate: 6%

Results:

Corpus at Retirement: INR 1.15 crore
Monthly Pension: INR 23,000

Scenario 2: Higher Contributions and Returns

Current Age: 35
Retirement Age: 60
Monthly Contribution: Rs 10,000
Expected Return: 10% annually
Annuity Allocation: 50%
Annuity Return Rate: 7%

Results:

Corpus at Retirement: INR 2.3 crore
Monthly Pension: INR 48,000

Scenario 3: Lower Contributions with Longer Horizon

Current Age: 25
Retirement Age: 60
Monthly Contribution: Rs 3,000
Expected Return: 8% annually
Annuity Allocation: 40%
Annuity Return Rate: 5%

Results:

Corpus at Retirement: INR 80 lakh
Monthly Pension: INR 16,500

Key Benefits of Using the NPS Calculator

This tool offers clarity in helping you meet those retirement expectations.
Trying various combinations, such as changing contribution amounts or rate of return, will give you the ability to see different possibilities.
Visualising possible scenarios before you finalise decisions on how to allocate your assets or the amount you will be contributing provides better information and allows you to make these decisions based on facts rather than emotions.
Since the calculator is available online, you may access it at any time to rethink and modify your existing plan.

Conclusion

Using the NPS calculator can easily help you work out your potential retirement corpus and “pension equivalent” (i.e., what the amount per month will be if you withdraw funds over time) by making it simpler to understand the key features of the NPS system and effectively utilising the tools available within the calculator. After doing so, you will create a solid financial plan for retirement based on your custom goals.

What is Loan Against Mutual Funds (LAMF)? – How to Apply?

Mutual Funds

Shitanshu Kapadia

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April 22, 2026

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If you run short of funds due to unexpected medical expenses or simply improving your home or any other requirement. In such conditions, most individuals will choose to take a personal loan, use credit cards or make an investment liquidation. Yes, all of the mentioned solutions may be good to overcome your immediate problems, but they might cause serious trouble in the future.

A personal loan is quite expensive. The average rate for taking a personal loan might vary from 12% to 25% per year, depending on the lender and your current credit history.

Credit card debt is even more painful. In case the total sum is not paid timely, you will need to face annual interest rates ranging between 35% and 45%. Besides that, if you miss the deadline or pay late, you will also have to bear penalty charges and the interest rates will become even higher. Not only will you owe extra money, but your credit history will suffer from that too.

However, there is still a trick: I will try to pay off the loan faster and avoid paying huge amounts of interest. But you should remember that many companies impose prepayment penalties. Therefore, instead of saving your finances, you will have to waste additional money because of this clause.

Ok, but what if I decide to liquidate my investments? Yes, you will have extra funds for some time, but you will fail to achieve your initial goals. On top of that, you will suffer from taxation and penalties associated with early withdrawals of your money.

In fact, there is another solution that often remains ignored: Loan Against Mutual Funds.

What is Loan Against Mutual Funds?

A loan against mutual funds lets you use your mutual fund units as collateral to borrow money from a bank or NBFC. You don’t have to sell or redeem your investments to get these funds—the value of your mutual funds basically backs the loan.

The lender figures out how much they can offer based on how much your mutual fund units are worth at the time. When you take out the loan, the bank or NBFC puts a lien on those specific units. This just means you can’t sell or redeem them until you’ve paid back what you owe.

Instead of pulling money out of your investments—especially if you’ve got long-term plans—you keep your mutual funds growing and compounding. Any SIPs (Systematic Investment Plans) you have running keep going too, so you’re not interrupting your savings. You also pay less interest than you would on a typical personal loan, since this one is secured against your investments.

Repayment is flexible. There aren’t fixed EMIs like with a regular loan; you can repay at your own pace. You won’t get penalized for prepayments either, and you’re free to use the borrowed money however you need to, as long as it’s all above board. The whole process is simpler than most loan applications—you can even do it online with some banks.

Who offers loans against mutual funds?

Plenty of big banks and NBFCs provide this service, both online and offline. For example, SBI, ICICI Bank, and HDFC Bank let you do the whole thing online, no paperwork, often for pre-qualified customers. Just keep in mind: not every lender accepts mutual funds from every asset management company (AMC). Some, like ICICI Bank, will only grant loans on mutual funds registered with CAMS, which is a major mutual fund transfer agency in India.

ICICI Bank, for instance, offers loans starting at Rs 50,000. The upper limit is usually Rs 20 lakh for equity mutual funds and Rs 1 crore for debt mutual funds. Lenders decide the eligible amount based on the current value of the mutual funds you’re pledging, and typically lend 50-70% of equity fund value and 80-90% of debt fund value (this is the Loan-To-Value ratio).

If your mutual funds aren’t on the list of approved schemes with major banks, you aren’t out of options—new-age digital lenders like Dhan, or NBFCs like Tata Capital and Bajaj Finserv, can help. With the Reserve Bank of India expected to lower rates soon and there being plenty of liquidity, interest rates for these loans are competitive—sitting around 10-12% per annum.

When to opt for Loan Against Mutual Funds?

So, when does taking a loan against your mutual funds make sense? Do it only if you really need the money and want to avoid selling your investments or pausing your SIPs. Don’t view this as a way to play the markets. If equity funds are already down—say, they’ve lost about 21% so far in 2025—you’ll only be able to borrow a smaller amount anyway. Worse, if markets drop more, you might get a margin call, meaning the lender will ask for more collateral, or even ask you to repay some of the loan right away, plus you’ll be paying high interest on top of that.

This holds true for debt funds as well. If your debt mutual funds are invested in poor-quality instruments, you might be forced to provide extra collateral if their value drops. But if the markets turn and asset prices bounce back, you won’t have to worry about extra margins or losing your pledged units—your mutual funds are growing again.

How to Apply?

So, how do you apply? The steps are pretty simple, especially online. Head to your lender’s website, log in to your net banking, and enter your personal details. Upload the documents they ask for—usually a consolidated account statement of your mutual fund holdings. Then, pick which investments you want to pledge, agree to the terms, and the money lands in your account.

Closing the loan is also straightforward. As you repay, some lenders even release some of your pledged units. When you’ve fully paid off the loan, the lender tells the fund house to remove the lien, and you get full access to your investments again. But if you can’t repay, the lender can ask the fund house to sell those units to recover what you owe.

Conclusion

To sum up, a loan against mutual funds can help you through a cash crunch without forcing you to break your investments. That being said, always think carefully—consider market conditions, the reasons you need the money, and how you plan to pay it back before deciding to take this route.

XIRR and CAGR – Key Differences & Formulas Explained

Shitanshu Kapadia

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April 21, 2026

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Measuring your performance becomes equally important whenever you choose a suitable investment vehicle. XIRR and CAGR are two popular metrics that can be used by you in order to measure the performance of your money. Even though both of these metrics will provide you with valuable information about how your money has grown over time, there are different investment situations where you need to use different measures.

This article is specifically designed for people who have no idea regarding which measure to use for calculating performance in case of SIP investments, lump sum investments, etc. Let’s see what these metrics mean, what’s the difference between them and how to calculate them.

What is CAGR?

CAGR is the abbreviation for Compound Annual Growth Rate. CAGR is the growth rate of the investment for a specified period of time. This is the growth rate which is achieved by the investment in each year. In other words, CAGR takes into account the volatile nature of returns each year and gives a percentage figure of growth rate in annual figures.

The use of CAGR can be seen in the evaluation of investments, which have been done in one single transaction.

CAGR Formula

CAGR = (Ending Value / Beginning Value)^(1/n) − 1

Where:

Ending Value = the final value of the investment
Beginning Value = the initial amount invested
n = number of years the investment was held

Example of CAGR Calculation

Suppose you invested ₹1,00,000 in a mutual fund, and after 5 years, the value grew to ₹1,80,000. Using the CAGR formula:

CAGR = (1,80,000 / 1,00,000)^(1/5) − 1 CAGR = (1.8)^(0.2) − 1 CAGR = 1.1247 − 1 CAGR = 0.1247, or 12.47%

This translates to an average yearly growth of 12.47% for the 5 years in question, despite the possibility that returns each year may have varied significantly.

What is XIRR?

XIRR refers to Extended Internal Rate of Return. In contrast to CAGR, which is effective only in case of investment of one single lump sum, XIRR is an indicator that can work with several cash flows coming at unequal intervals. Thus, XIRR is the best return calculation formula in case of SIPs (where investors make equal investments on a monthly basis) or portfolios having deposits and withdrawals at various points in time.

XIRR takes into account the exact dates of all cash flows (inflow and outflow) and calculates an annualized rate of return considering all transactions.

XIRR Formula

Unlike CAGR, there is no straightforward algebraic equation to work out XIRR. XIRR calculation involves the process of iteration, in which we find r from the below equation:

0 = Σ [CFi / (1 + r)^((di − d1)/365)]

Where:

CFi = cash flow at time i (positive for inflows, negative for outflows)
di = date of the i-th cash flow
d1 = date of the first cash flow
r = the rate of return we are solving for (XIRR)

As this formula depends on “r” being solved by trial and error (iterative approximation), XIRR is most of the time computed with the help of spreadsheet tools like Microsoft Excel or Google Sheets, which have the XIRR() formula embedded in them.

Example of XIRR Calculation

Let’s say you invested in a SIP with the following cash flows:

Date	Cash Flow (₹)
01-Jan-2021	−10,000 (investment)
01-Jan-2022	−10,000 (investment)
01-Jan-2023	−10,000 (investment)
01-Jan-2024	40,000 (redemption/current value)

In Excel, you would enter these dates and cash flows into two columns and use the formula:

=XIRR(values, dates)

The annual rate of return will then be calculated by Excel after taking into account the precise date on which each transaction has taken place; something that is not possible with CAGR.

XIRR vs CAGR Differences

After understanding both the methods, now we will look into the comparison between both of them.

Type of Cash Flows

CAGR can work only with a single inflow of cash and a single outflow of cash – basically a lump sum invested at the beginning and withdrawn at the end.
XIRR works with many cash flows occurring at different times, so it can be used for SIPs, staggered investments, and portfolio management with irregular investments and withdrawals.

Complexity of Calculation

CAGR can be calculated manually through an easy formula.
XIRR needs iterative calculation, and hence it is calculated either through financial calculators or through Excel functions as there is no direct closed form formula for XIRR.

Accuracy in Real World Scenario

CAGR assumes smooth uniform growth rate that rarely happens in real world scenario. Also CAGR doesn’t consider multiple investments.
XIRR is much realistic since it considers the exact dates of all transactions and thus captures the effect of the timing of inflows/outs of money from the investment.

Areas of Application

CAGR is used to compare the performances of two lump sum investments, determine revenue/earnings growth of a company over a number of years, or calculate the returns of a fixed deposit.
XIRR is used to calculate the returns of SIPs, recurring deposits, insurance-based investments, or in portfolios where investments/withdrawals have been made at different times.

Assumption of Growth Rate

The CAGR method assumes that the investment grows at the same rate every year, something which is not true in case of equity markets, which are highly volatile.
The XIRR method does not make an assumption about the rate of growth. Instead, it calculates the average annual rate of growth regardless of how volatile the process may have been.

When Should You Use CAGR?

CAGR works most effectively in scenarios that deal with only one investment made and analyzed once. These include:

Analyzing the growth rate of an investment made in a mutual fund over a number of years
Comparing the past performances of two or more stocks or mutual funds
Measuring the growth rate of revenue, profits, or users of a company over a number of years
Gaining insight into the growth trend of a fixed deposit or bond that matures at the end of its term

Since CAGR presents all the data as one smooth value, it is perfect for making fast comparisons but can give false information when used in case of investments that have more than one transaction.

When Should You Use XIRR?

XIRR is particularly useful in situations where there are multiple cash flows occurring at different points in time. Some applications are listed below:

The calculation of the returns from SIPs in mutual funds
The evaluation of RDs having periodic deposits
The evaluation of the performance of a portfolio having periodic additions and partial withdrawals
The evaluation of the returns of ULIPs (Unit Linked Insurance Plans) or any other investment cum insurance product having periodic premiums
The comparison of the actual performance of a portfolio with benchmark indices when the method of investing in the portfolio is not one-time

For investors who invest regularly through SIPs, XIRR will provide a much clearer indication of the actual returns than CAGR ever could.

Why CAGR Can Be Misleading for SIP Investments

CAGR for SIP returns calculation is one of the most prevalent mistakes committed by new investors. The reason behind this is that SIP is a sequence of investments rather than a lump sum investment. This implies that CAGR cannot be used here because in case of SIPs, the cash flow pattern is complicated or else the rate of return generated using CAGR is incorrect.

The above statement can be justified using an example in which an investor makes ₹5,000 investment every month for three years. It means that there have been 36 SIP investments in three years having varying holding periods. The CAGR formula does not consider the point that the cash flow of the first month has been compounding for three years, while the cash flow of the last month has not had any time to compound.

CAGR vs XIRR

Parameter	CAGR	XIRR
Best for	Lump sum investments	SIPs & multiple cash flows
Cash flow timing	Assumes single start and end	Considers exact dates of all flows
Calculation method	Simple formula	Iterative, needs software
Growth assumption	Constant annual growth	No fixed assumption
Common tools	Manual calculation, calculators	Excel/Google Sheets XIRR function
Accuracy for irregular investments	Low	High

How to Calculate XIRR and CAGR in Excel

Both metrics can be easily calculated using Excel or Google Sheets:

For CAGR: Use the formula =(Ending Value/Beginning Value)^(1/n)-1, where “n” is the number of years.

For XIRR:

List all your cash flows (investments as negative values, redemptions/current value as positive) in one column.
List the corresponding dates in an adjacent column.
Use the formula =XIRR(values, dates) to get the annualized return instantly.

This makes XIRR far more practical for real-world portfolios where money moves in and out at different times.

Final Thoughts

Although CAGR and XIRR are important concepts for measuring investment success, their application differs from case to case. While CAGR gives a quick measure to calculate the annualized return of an investment, it is appropriate when there is a single lump sum investment made. On the other hand, XIRR is the more complex tool which needs to be applied whenever there are several cash flows involved.

Applying the concept of XIRR and CAGR at the right time will help you understand how much you have actually gained in return of your investments. As a matter of fact, if you make investments through the route of SIPs, it is mandatory that you use XIRR to determine your returns. CAGR can be used for single lump sum investments or when there is an overall analysis of the trend.

In this way, understanding these two metrics will help you in taking wise investment decisions in the future.