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    CAGR — Compound Annual Growth Rate Explained

    CAGR represents the mean annual growth rate of an investment over a specified period longer than one year, smoothing out volatility.

    CAGR Formula

    CAGR = (Ending Value / Beginning Value)^(1/n) - 1, where n = number of years. It tells you the rate at which an investment grew as if it grew steadily each year.

    CAGR vs Average Returns

    Average returns can be misleading. If a stock goes up 100% then down 50%, the average return is 25% but actual return is 0%. CAGR gives 0% — the true picture.

    Typical CAGR Benchmarks

    Nifty 50: ~12% CAGR over 20 years. Gold: ~10%. Real estate: ~8-10%. FD: ~6-7%. Inflation: ~5-6%.

    Frequently Asked Questions