InvestorQ : How to calculate NPS returns if I would invest different amounts each year?
Rutuja Nigam made post

How to calculate NPS returns if I would invest different amounts each year?

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Ashok Patkar answered.
3 weeks ago
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NPS stands for National Pension Scheme and when you make an investment, all you have to do is to keep track amount that you have invested and the respective date. If you are making payments online, you can obtain these dates and amounts from your bank account as well in case you have no kept the record yet.

For the purpose of calculating absolute returns, at any given day, you can calculate the amount based on the Market Value of Investment and the amount of total investment to date.

To calculate the annualized % return, you need to calculate the time-weighted return, which is:

TWR=[(1+HP1​)×(1+HP2​)×⋯×(1+HPn​)]−1, where:
TWR= Time-weighted return=
n= Number of sub-periods
HP= End Value − Initial Value + Cash Flow /(Initial Value+ Cash Flow )
HPn​= Return for sub-period n​

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