Mutual Funds 4 min read
What is CAGR and How to Calculate It
Understanding Compound Annual Growth Rate with formula, examples, and how to use it to compare investments.
F
IPOfins Team
Finance Research & Data • June 2026
What is CAGR? — Compound Annual Growth Rate
CAGR shows the steady annual rate at which your investment grew, eliminating year-to-year volatility.
Formula
CAGR = (Final Value / Initial Value)^(1/Years) - 1
Example
₹1 lakh became ₹2.5 lakhs in 5 years: CAGR = (2.5)^(1/5) - 1 = 20.1% per year
Good CAGR Benchmarks (India)
- FD: 6-7%
- PPF: 7-8%
- Nifty 50: 12-14%
- Good mutual fund: 15-20%
- Top small-cap: 20-30%