CAGR stands for compounded Annual Growth Rate.Its is all about and how your money multiplies under compounding. When money compounds over several years, the finance world use a simple metric called compounded annual growth rate (CAGR) that helps gauge the annual compounded returns on your investment, over several years. The returns that you see in your Stocks or mutual funds for period of more than one year is CAGR.
🚩The growth rate is the amount by which an investment increased in value over a specific period of time. In this case, it refers to how much an investment has grown in a year. Calculations of historical growth rate are often used for estimating future growth.
🚩If stock appreciates from Rs.100 to Rs.250 say in 5 years or Rs.10000 invested grows to Rs.25000 than Particular Stock or investment has grown @20.11% CAGR in 5 years.
🚩In reality stock or investment wont give positive return every year.for example Rs.100 stock can move to 150 in 1st year and 200 in second year and 140 in third year and 210 in fourth year and 250 in fifth year.
🚩Few Stocks that can be Added in SIP or Lumsum on correction for Value creation in long run to achieve particular Goals to name a few are
Every Bull market Rally has it’s own set of stocks & Sectors.
Disc – All Views expressed are personal and only for study & Educational purpose. Consult your financial advisor before investing or taking any position based on above article.