Calculating Returns on MF

Most of us invest a large portion of our savings in MFs. Suppose you invested 1 lakh on a MF, at NAV of Rs 20. After 5 yrs the value is Rs 50. So u can that rate of interest earned is (50/20*100) = 250 % or 50% per year. Unfortunately this is not true. The actual interest earned is given by CAGR (Compounded Annualised Growth Rate) =

(((M/I)^(1/N))-1)*100

So the interest earned in above example is actually = (((70/20)^(1/5))-1)*100
= 28.47%

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