Are You Actually Beating Nifty 50? Here's the Only Honest Way to Find Out

Here's an uncomfortable question: Is your stock picking actually making you more money than just buying an index fund?

Most investors assume yes. After all, you've spent hours researching stocks, timing entries, tracking your portfolio. Surely all that effort is paying off?

But here's the truth — most retail investors underperform a simple Nifty 50 index fund. Not because they're bad at picking stocks, but because they're comparing the wrong things. They compare their portfolio returns without asking: what would the same money have earned in Nifty 50 over the same period?

That's the only comparison that matters. And it's exactly what XIRR Ledger shows you.

The Problem with "My Portfolio is Up 18%"

Let's say you earned 18% XIRR on your portfolio last year. Great — but what did Nifty 50 return?

If Nifty returned 12%, you beat the market by 6%. Excellent.
If Nifty returned 20%, you underperformed by 2%. All that effort for less money.

The number in isolation tells you nothing. A return only has meaning when compared to an alternative.

And the most important alternative for any Indian investor is Nifty 50 — the benchmark that represents the Indian market's overall performance.

Why Most Benchmark Comparisons Are Wrong

Here's where people get it wrong when comparing themselves to Nifty 50:

They say: "Nifty went up 15% last year, and I made 18%, so I beat it."

But this is a flawed comparison. Here's why:

You didn't invest all your money on January 1st. You made multiple deposits throughout the year. You withdrew money at different points. Your actual capital was different from month to month.

To make a fair comparison, you need to ask: "If I had invested the exact same amounts, on the exact same dates, into Nifty 50 instead — what would I have today?"

That's a completely different question. And the answer is often surprising.

The Fair Way to Compare: Mirror Your Cash Flows

The correct approach is to mirror your actual transactions into Nifty 50:

Every time you deposited money into your broker account, assume you bought Nifty 50 units on that exact date.

Every time you withdrew money, assume you sold Nifty 50 units on that exact date.

Then calculate: what would that Nifty 50 portfolio be worth today?

This gives you a Nifty 50 XIRR — calculated on your actual cash flows, not on some hypothetical lump sum investment.

Now compare your portfolio's XIRR against this number. That's the honest benchmark.

A Real Example

Let's say your transaction history looks like this:

Jan 1:  Deposited ₹2,00,000 to broker
Apr 1:  Deposited ₹1,00,000 more
Jul 1:  Withdrew ₹50,000
Dec 31: Portfolio value = ₹3,20,000

Your XIRR: ~16.5%

Now we mirror the same transactions into Nifty 50:

Jan 1:  Bought Nifty 50 worth ₹2,00,000 at 21,500
Apr 1:  Bought Nifty 50 worth ₹1,00,000 at 22,800
Jul 1:  Sold Nifty 50 worth ₹50,000 at 23,500
Dec 31: Nifty 50 at 24,900 → Nifty portfolio value = ₹3,08,000

Nifty 50 XIRR on same cash flows: ~13.8%

Your XIRR: 16.5%. Nifty XIRR: 13.8%.

You beat the market by 2.7%. That's a real, meaningful outperformance — because it accounts for the exact same money on the exact same dates.

What If the Numbers Are Reversed?

Now imagine the same example but your portfolio is worth ₹2,95,000 instead.

Your XIRR: ~11.2% Nifty 50 XIRR: ~13.8%

You underperformed by 2.6%. Every rupee of "alpha" you thought you were generating was actually just the market rising — and you captured less of it than a passive index fund would have.

This doesn't mean you're a bad investor. It means you now have honest data to make a better decision:

Should you shift some money to index funds?
Is the time you spend on research worth the result?
Are you taking more risk than the market but earning less?

You can't answer any of these questions without an honest benchmark comparison.

Why This Is Hard to Calculate Manually

To do this comparison yourself, you'd need to:

List every deposit and withdrawal with exact dates
Find the Nifty 50 price on each of those dates
Calculate how many units you'd have bought or sold
Track the running unit balance after each transaction
Multiply by today's Nifty 50 price to get current value
Run XIRR on those cash flows

That's a lot of work. For someone with 20–30 transactions over a few years, it could take hours — and one wrong date or price ruins the whole calculation.

XIRR Ledger does all of this automatically the moment you upload your ledger.

What XIRR Ledger Shows You

When you upload your broker ledger, we extract every cash flow — deposits, withdrawals, charges, dividends — with their exact dates.

We then run the same cash flows against Nifty 50's historical prices and calculate two numbers side by side:

Your portfolio XIRR — your actual annualized return, after all costs
Nifty 50 XIRR — what the same money would have earned in the index

The difference between these two numbers is your real alpha — the value your investing decisions actually created (or destroyed).

What the Comparison Tells Different Types of Investors

Long-Term Investors

If you've been doing SIPs or buying individual stocks over years, this comparison tells you whether your stock selection added value over a simple index fund. For most long-term investors, this is the most important number in their financial life.

Active Traders

If you're swing trading or doing F&O, you're taking on significantly more risk and spending far more time than a passive investor. Your XIRR should reflect that — ideally by a wide margin. If you're earning 14% while Nifty gave 15%, the data is telling you something important.

New Investors

If you started investing recently, this comparison tells you early whether your approach is working — before you've committed years of time and capital to a strategy that might not be beating the simplest alternative.

The Mindset Shift

Most investors track their returns in isolation. "I made 20% this year."

The right question is always: "20% compared to what?"

Nifty 50 is the baseline every Indian investor should measure against. It requires zero skill, zero research, zero monitoring — just a monthly investment in an index fund. If you're not consistently beating it after costs, you're paying (in time, effort, and sometimes money) for returns you could have gotten automatically.

That's not a reason to give up on active investing. It's a reason to measure honestly, adjust intelligently, and make decisions based on data rather than feeling.

The Bottom Line

Your returns don't exist in a vacuum. They only make sense when compared to what the same money could have earned elsewhere — on the same dates, with the same timing.

Nifty 50 is that baseline. Mirroring your actual cash flows into the index, and comparing XIRR to XIRR, is the only honest way to know if your investing is adding value.

Upload your ledger. See both numbers. Then decide.

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