FULL FORM OF CAGR

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             CAGR stand for Compound Annual Growth Rate. Any investment offers benefit of compounding and can build wealth. CAGR indicates how much investment grew over a specific period of time. In other words, it is the average returns an investor has earned on the investment after a certain period of time. The banks and financial institution calculates this rate in term of percentage.
              A stock or a mutual fund cannot provide constant rate of return every year. The rate may change from year to year. If the amount is reinvested then it is required to know the profit earned on all the investment together.

CALCULATION OF CAGR

          Maximum investors depends on absolute return to analyse the performance of their investments. However it does not consider the time value of money. CAGR takes into account the period for which investor is invested money. It provides an approximate rate at which investment would grow if there would be no volatility. It is an excellent way to factor the fluctuations experienced by the investment over a specific period of time,then it will be easy to assess the performance over the particular period of time.
        CAGR is easily calculated for calculation three things must be known ---
  •  The investment made in the initial year ie the first year of investment.
  •  Value of investment at the end of the year.
  •  Tenure of the investment.
   CAGR may be calculated with the help of following formula.                       
           
                 
  n= No of investment period in months/years.

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