Securing Hannav Ledger...
Securing Hannav Ledger...
Glossary
Compound Annual Growth Rate measures the smoothed annual return of an investment over a period, assuming profits are reinvested.
CAGR tells you the average yearly growth rate of an investment if it grew steadily each year, even when actual returns were uneven.
CAGR is the geometric mean return that equates beginning value, ending value, and time. It ignores volatility and interim cash flows, so it differs from XIRR when SIPs or withdrawals occur.
If you invested ₹1,00,000 in a mutual fund and it grew to ₹1,61,051 after 5 years, CAGR is 10% per year — the steady rate that would produce the same ending value.
CAGR = (Ending Value ÷ Beginning Value)^(1 ÷ Years) − 1No. Simple averaging of yearly returns can overstate performance. CAGR uses compounding and reflects the actual growth path from start to end value.
CAGR works best for lump-sum investments. For SIPs with multiple cash flows, use XIRR instead for a more accurate return measure.
Historically, broad Indian equity funds have delivered roughly 12–15% CAGR over long periods, but past performance varies widely and is not guaranteed.