This walkthrough uses a hypothetical regular-plan growth option, “Nadi Equity Fund”, so we can show the arithmetic without pretending to quote a live factsheet. The dates and rupees are rounded on purpose. Do not treat them as a performance claim for any real scheme.
The folio
- Investment: ₹1,25,000 lumpsum on 1 April 2019
- Valuation: ₹2,41,800 on 1 April 2025
- Holding: exactly six years
- No SIP, no STP, no partial redemption
Because there is a single buy and a single mark-to-market, CAGR applies. If a ₹5,000 SIP had run alongside, we would stop and use XIRR instead.
Absolute numbers first
Gain = 2,41,800 − 1,25,000 = ₹1,16,800. Absolute return = 1,16,800 / 1,25,000 = 93.44%. That is the statement-line many apps print in a large typeface. It is true and it hides the six years.
CAGR, step by step
- Ratio = 2,41,800 / 1,25,000 = 1.9344
- Years n = 6
- 1.9344 raised to 1/6 ≈ 1.1162
- Subtract 1 → 0.1162, or 11.62% a year
Check by compounding forward: 1,25,000 × (1.1162)^6 ≈ 2,41,800. Load the same three inputs in thecalculator and you should land on the same rate within rounding.
A smoothed path at 11.62%
The table below is not the fund’s yearly NAV return. It is what the corpus would have been at each anniversary if it had compounded at a dead-flat 11.62%. Actual equity years would have been scattered around that line — including at least one that felt unforgivable.
| Anniversary | Smoothed value |
|---|---|
| Apr 2019 (start) | ₹1,25,000 |
| Apr 2020 | ₹1,39,530 |
| Apr 2021 | ₹1,55,749 |
| Apr 2022 | ₹1,73,853 |
| Apr 2023 | ₹1,94,062 |
| Apr 2024 | ₹2,16,620 |
| Apr 2025 (end) | ₹2,41,800 |
Same six years in a 6.5% FD
₹1,25,000 at 6.5% compounded annually for six years: 1,25,000 × (1.065)^6 ≈ ₹1,82,000. The equity folio’s extra rupees are about ₹60,000 in this toy example. That gap is the equity risk premium you happenedto receive in this window, not a premium you are owed in the next one. An FD also did not ask you to sit through March 2020.
Taxes and expenses, named but not subtracted
The ₹2,41,800 is a NAV-based value. The expense ratio of the regular plan is already inside that NAV; do not deduct it again. If you redeem, listed-equity mutual-fund gains may attract long-term capital gains tax above the prevailing exemption, plus cess. Rules change. This article does not compute your tax due. An 11.62% pre-tax CAGR can be a lower post-tax CAGR once you actually sell.
Exit loads, if any, would reduce the end value you should type into the calculator. Use the amount that would hit your bank, not the headline corpus, if you are modelling a redemption.
What to change if your facts differ
- Different dates: count months if it is not a round number of years.
- Direct plan vs regular: use your actual invested amount and your actual current value. Do not mix plans.
- Dividend / IDCW option: add distributions back, or switch to XIRR with each payout as a cash flow.
- Multiple folios: compute each lumpsum, or combine cash flows in a spreadsheet.
More on the definition sits in What is CAGR. If any of the “what to change” bullets involve extra dates, read CAGR vs XIRR instead of forcing this example.
Run the same numbers in the CAGR calculator, or read thedisclaimer before you treat a rate as a decision.