## CAGR – Compound Annual Growth Rate

Compound Annual Growth Rate is the way to calculate the annual return for an investment over a certain period. e.g., Mutual fund or Stock or Business.

Beginning Balance = Invested unit price of Mutual fund or Stock

Ending Balance = Current unit price of that Mutual fund or Stock

N = Number of years

## CAGR Calculation

Let see how to CAGR is calculated for Mutual Fund and you can use this formula in google sheet.

Example 1: 10 rupees per unit at the time of investing and after one year unit value is increases to 14 rupees per unit.

Beginning balance = 10, Ending balance = 14 & Number of years = 1

= (14/10)^(1/1)-1= 0.4*100= 40

Example 2: 10 rupees per unit at the time of investing and after two year unit value is increases to 14 rupees per unit.

Beginning balance = 10, Ending balance = 14 & Number of years = 2

= (14/10)^(1/2)-1= 0.1832*100= 18.32

You can use this link to calculate CAGR online: CAGR Calculator – Compound Annual Growth Rate (CAGR) Calculator Online (groww.in).

## Check with Mutual Fund

Fund Name: SBI Banking & Financial Services Fund Direct – Growth

Launch Date: 26 Feb 2015

Initial price per unit at fund launched was ₹10

Now price per unit (09 Jan 2021) is : ₹23.069

Number of years of this fund from launch date: 5 years, 10 months, now we consider 6 years for easy understanding

CAGR % of this fund is 14.95%

## Conclusion

CAGR is help to find the good  mutual fund in the past history and it helps to  make decision stay invested in that fund or not over the period.  