2 replies on this article “What is Internal Rate of Return (IRR) ?”

1. Manish Chauhan says:

   September 19, 2013 at 4:41 pm

   Hi Sourav

   Internal Rate of Return means that rate which you finally got over an investment. When you pay X and get Y after Z yrs, its pretty easy to find out the rate of return you got . But when its very complex like – you pay 5 installments and you get back 2 money back in between and then finally some amount after 10 yrs , then it becomes a bit complex to find out the return . Then this IRR things comes into picture.

   People invest in products and policies based on the MONEY they put and MONEY they get like , Pay Rs 10,000 each year for 10 yrs and then get Rs 10,000 for next 50 yrs , If you look at this offer, people feel they are putting 1 lac in total and getting back 5 lacs in next 50 yrs, so they invest . But its such a disgusting policy where you are not getting any returns compared to FD’s or any other asset class , becasue when you ask what is IRR , you find out that its pretty low .

   I suggest you read these articles to understand more on IRR

   https://www.jagoinvestor.com/2009/08/what-is-irr-and-xirr-and-how-to.html

   https://www.jagoinvestor.com/2011/02/calculate-insurance-policies-returns-video.html

   I hope you get the understanding of IRR using these articles

   Manish

   Reply
   1. Sourav says:

      September 19, 2013 at 10:38 pm

      Thanks Manish.

      The mentioned article discusses IRR in a informative manner.

      Reply

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