What is CAGR?▼
CAGR (Compound Annual Growth Rate) is the annualized rate at which an investment grows from its starting value to its ending value, assuming profits are reinvested each year.
CAGR vs absolute return — what's the difference?▼
Absolute return is total gain (e.g., 200%). CAGR normalizes this to an annual rate (e.g., 24.6% per year for 5 years). CAGR is better for comparing investments of different durations.
What is a good CAGR?▼
In India: 12-15% is excellent (equity), 7-8% is average (debt/FD), below 6% means you're losing to inflation. Nifty 50 has delivered ~12% CAGR over 20 years.