Most retail investors do not actually know their long-term returns. They remember the winners, forget the losers, and rarely compute true XIRR against benchmarks. Without measurement there is no learning — and no improvement.
This article shows you how to track a stock portfolio properly — measuring returns, calculating taxes correctly under FY 2025-26 rules, rebalancing with discipline, and running an annual review that compounds your judgment over time.
Covers: XIRR vs absolute return, LTCG/STCG calculation, sell triggers, rebalancing rules, free Indian tools, and a 6-area annual review template.
Measure Returns Correctly — Always XIRR
If you invest ₹1 lakh today and it becomes ₹1.5 lakh in 1 year, that is 50% absolute return = 50% XIRR — same thing. But almost no one invests in one lump. With multiple buys at different times, only XIRR gives the true annualised return.
XIRR vs Absolute Return:
Absolute = (Current Value − Total Invested) ÷ Total Invested × 100
XIRR = Annualised return accounting for every cash flow date
Quick Example
Invested ₹1 lakh over 12 monthly SIPs of ₹8,333. Final value ₹1.5 lakh. Absolute return: 50%. But XIRR ≈ 95% — because each tranche was invested for less than 12 months on average.
Easy Way:
In Excel or Google Sheets, list all transactions as (date, amount) — buys as negative, current value as positive on today's date. Then =XIRR(amounts, dates) gives your annualised return. Zerodha Console and Groww show XIRR automatically.
FY 2025-26 Taxes on Listed Equity Stocks
Type
Holding Period
Tax Rate
Notes
STCG
≤12 months
20% + 4% cess = 20.8%
Flat rate
LTCG
>12 months
12.5% + 4% cess = 13%
On gains >₹1.25L per FY
Dividends
—
Slab rate
TDS 10% if >₹5,000/yr per company
STCL
—
Set off against STCG & LTCG
Carry forward 8 years
LTCL
—
Set off against LTCG only
Carry forward 8 years
💰 Stock Returns & LTCG Calculator
Calculate exact post-tax returns by holding period for any Indian stock — handles ₹1.25L LTCG exemption, 4% cess, and the full FY 2025-26 framework.
If you bought a stock 11 months ago and have a 30% gain, waiting one more month converts STCG (20%) into LTCG (12.5% above ₹1.25L). On ₹3 lakh gain, that saves you ₹13,125 in tax. Always check the date.
Rebalancing — Two Approaches
Calendar-Based
Pick a fixed date once a year (most do March-end to align with tax year). Check actual vs target allocation. Rebalance back. Pros: simple, predictable. Cons: ignores big mid-year drifts.
Threshold-Based
Set a drift band (typically 25-30%). If any holding moves outside the band, rebalance. Example: target 5% in Reliance → rebalance band is 3.75-6.25%. If position becomes 8%, sell back to 5%. Pros: tracks risk dynamically. Cons: more trades, more tax events.
The Hybrid Approach (Recommended)
Annual full review every March-end + threshold trigger if any single stock crosses 12-15% of portfolio. Combines discipline with risk management.
When to Sell — Five Legitimate Triggers
Thesis broken — original buy reason no longer holds (competitor disrupted, management changed, regulation hit)
Massively overvalued — PE 2-3x sector average without growth to justify
Better opportunity — another stock is meaningfully more attractive and capital is constrained
Concentration too high — one stock has become >15-20% of portfolio
Need money for life goal — house, education, retirement income
Avoid selling because: stock dropped after buy (often best time to add), market panic, or boredom with underperformance for 1-2 years.
Annual Review — 6 Areas, 3-4 Hours
Set aside one Saturday in March or April. Cover all six areas. Document decisions for next year's review.
Use XIRR when you have made multiple investments over time. XIRR is the annualised return that accounts for the timing of every cash flow. Absolute return ignores timing. Example: investing ₹1 lakh over 12 monthly SIPs and ending at ₹1.5 lakh is 50% absolute but ~95% XIRR. Excel/Google Sheets have an XIRR() formula. Zerodha Console and Groww display XIRR by default.
For listed Indian equity stocks: STCG (≤12 months) is 20% flat + 4% cess = 20.8% effective. LTCG (>12 months) is 12.5% on gains above ₹1.25 lakh per FY + 4% cess = 13% effective. The ₹1.25 lakh annual LTCG exemption is per individual per FY combined across all equity. Dividends taxed at slab rate. STCL set off against STCG/LTCG; LTCL only against LTCG. Unused losses carry forward 8 years.
Two approaches both work — calendar (annual March-end check) or threshold-based (rebalance when any holding drifts >25-30% from target). Why rebalance: controls concentration risk, forces disciplined sell-high/buy-low, keeps risk profile aligned with original choice. Indian tax tip: holding stocks over 12 months reduces tax rate from 20% (STCG) to 12.5% (LTCG with ₹1.25L exemption) — delay sells until the 1-year boundary where possible.
Six tools: (1) Zerodha Console — XIRR, allocation, P&L, tax statements; (2) Groww app — clean portfolio view; (3) Kuvera — aggregates across brokers; (4) MProfit (paid ₹3,000/year) — comprehensive; (5) Excel/Google Sheets with XIRR — ultimate flexibility; (6) CAMS or KFinTech eCAS — consolidated account statement monthly. Most retail investors do well with broker dashboard + personal Google Sheet for cross-broker consolidation.
Six areas, 3-4 hours typically March/April: (1) Returns — XIRR vs Nifty 50/500 TRI benchmark; (2) Allocation drift — current vs target weights; (3) Tax planning — harvest losses to offset gains; (4) Thesis check — would I buy each holding today; (5) Quality check — has ROCE/debt/growth deteriorated; (6) New ideas — update watchlist. Document decisions to review what worked next year. This single annual habit separates serious investors from speculators.
Five legitimate triggers — none of them is "price went down". (1) Thesis broken; (2) Massively overvalued; (3) Better opportunity needs capital; (4) Concentration >15-20% of portfolio; (5) Need money for life goal. Avoid selling because: stock dropped after buy (often best time to add), market panic, or boredom with underperformance for 1-2 years.
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