To understand how your investments are doing on Goalwise, it’s important to know a few terms that may be new to some investors but are crucial.
A. Terms on the Dashboard
1. Current Value
This is the market value of your existing investments based on the most recent mutual fund NAV data available. This is simply calculated as the number of units you own in a mutual fund multiplied by its respective latest NAV (Net Asset Value or price per unit) and then adding up everything fund-wise. This overall value shows how your investments are valued at present and comparing it with how much you have invested tells you whether you have profits or losses.
2. Total Gains
This is the total gain/loss you have made on ALL your investments over your entire investment history. They can be segregated as below:
a) Realised gains - These are the gains or losses on investments (i.e. Mutual Fund units) that you have already sold either by redeeming, switching or during rebalancing (as that also involves redemption)
b) Unrealised gains - These are the gains or losses on investments (i.e. Mutual Fund units) that have not been sold yet and are a part of your current portfolio.
Note: Remember you can have losses too, so realised, unrealised or total gains can be negative as well.
3. Net Invested Value
This amount refers to the total investments you have made so far minus the total withdrawals (redemptions) you have made so far over your entire investment history. This basically means how much net cash has been put in by you till now.
4. CAGR (Compound Annual Growth Rate)
In very simple terms, this is the annual (i.e per year) average returns earned by your investments over their entire investment duration.
Conceptually, CAGR ~ Absolute Returns/Investment Duration (in Years)
A very simple example to understand this would be, say you have Invested Rs. 10,000 in a fund and it’s returns over 3 consecutive years have been 5%, 10% and 15% respectively. While the total returns would be ~ 30%, the average annual returns made over the last 3 years is:
(5 + 10 + 15)/3 = 10% returns per year on average.
This average return per year is basically the CAGR.
Note: The above is not the exact formula for CAGR because investment returns are not calculated as simple returns but as compounding returns, but this is good enough for understanding the concept.
You can read about this in further detail in our blog about absolute returns and CAGR
5. Total SIPs
This simply refers to the total of all the SIPs you have set up across all your goals.
For example if you have 3 goals (as below)
Retirement goal - SIP of Rs. 10,000
Children’s goal - SIP of Rs. 20,000
House goal - SIP of Rs. 30,000
The total SIPs here will reflect as Rs. 60,000 (Rs. 10,000 + Rs. 20,000 + Rs, 30,000).
You can read more about SIPs here.
6. Risk Profile
Risk profile denotes how much risk one should ideally be taking in their investments considering all the factors like one's financial situation, need to take risks and attitude towards gains and losses.
If you have taken our risk profile questionnaire (can be taken via the dashboard menu) then the result of that assessment will be shown here. If you haven’t taken the risk profile assessment yet, we recommend doing this asap.
Once you have taken the risk profile, that result will be used as the default risk setting in the goals that you add (except goals with a fixed risk profile like emergency fund, smarter savings and tax save).
You can read further on risk profiling and its significance on our blog here - what is risk profile is and how it’s measured.
7. Asset Allocation (Equity:Debt)
This is a very simple ratio (shown in percentage) that represents how your overall portfolio (across all goals) is split into equity funds and debt funds.
For example, If 20% of my overall portfolio of investments is in equity funds and 80% of the portfolio is in debt funds, then this ratio will simple show as 20% : 80%
Compare it with your recommended risk profile and ensure that you have not taken more risk (more risk means higher equity exposure than what your risk profile indicates). E.g for moderate risk profile, your equity exposure should not exceed 60%. If you invest as per your risk profile in all the goals, this will usually not be the case.
B. Terms on the Goal Details Page
Most terms you will come across on this page (when you click on the goal) are the same as the ones that I have explained above, but these are simply at a goal level.
We have already discussed the meaning of Current amount, Net Invested, Total Gains, CAGR, Active SIP (SIP at the goal level), Equity, Debt.
There are two terms I would like to discuss here
This reflects the the risk level that you have selected for your goal and can be either of the 4 below:
d) Custom - You can select any ratio of equity:debt you prefer
There are certain goals which have fixed risk levels e.g. Emergency fund and Smarter Savings have low risk because you can only invest in liquid & debt funds in them and Tax Save goal is high risk because it only allows investments in ELSS funds which are a type of equity funds. For the rest of the goals, the risk level can be chosen by the investor.
In investing, goal tracking means periodically checking whether you are on-track to achieve the desired target amount in the time horizon you have set for the goal.
Whether a goal is on track or off track depends on whether the projected value of the goal (based on its current status and your planned investments, asset allocation and some reasonable assumptions about the future returns of these investments) is higher or lower than your desired target value.
If your goal is on-track then you can rest easy rather than constantly wondering and worrying. If not then you can take some corrective actions to bring it back on track in a timely way. When you find that your portfolio is off-rack then you can take one or more of the following corrective actions to get it back on-track:
- Increase the SIP amount
- Do a one time lumpsum investment
- Increase the time horizon
- Decrease the target amount
Below is an example of how these options are shown:
You can read about this in further detail in our blog about goal tracking.
C. Terms at a Fund level
These are the details shown for each individual fund that you currently have investments in within a particular goal.
1. Current Value
This is the latest market value of the fund based on the most recent NAV data available.
The number of units you currently possess of this fund.
3. Invested amount
The amount that is currently invested in this fund (this when compared to the current value shows whether your investment in profits or losses). We don’t show net invested here as that makes more sense at a goal and dashboard level.
This is the gain or loss in that fund (only unrealised gains).
This is the average annual returns earned by your investments in that fund over your entire investment duration.
I hope this helps! Happy Investing :)