Ever felt lost by investment returns? Let's unravel the mystery of CAGR and truly understand your money's growth potential!
Your app, statement, and friends all show different numbers. What's the real story? It's time to understand CAGR – your investment's average annual growth.
CAGR (Compound Annual Growth Rate) is like a smoothed average. It shows how much your money would grow annually, assuming consistent growth and reinvested profits.
You need 3 things: Beginning Value (BV), Ending Value (EV), & Number of Years (n). Formula: `[(EV / BV)^(1/n)] - 1`. Simple example: ₹2L to ₹3.5L in 4 yrs = ~15.09% CAGR!
CAGR is great for lump sums. But for SIPs with multiple investments, XIRR (Extended Internal Rate of Return) is more accurate. It considers exact transaction dates for true returns.
Don't chase past CAGR blindly; it's no guarantee. Focus on longer-term trends (5-7 yrs). Always factor in expense ratios & exit loads for your actual realized returns.
Ready to take control? Use our Goal SIP Calculator, SIP Calculator, or Step-Up Calculator at sipplancalculator.in to plan your investments and track your true growth!