If someone asks you to jump in the pool, the first thing you will ask is the depth of the pool. Now, let’s say one person tells you it’s not very deep, while another tells you it’s 6 feet deep. What reaction would you consider when deciding to jump?

Most likely the latter, ie the pool is 6 feet deep. Similarly, when you are selecting an investment for your portfolio, which of the following feedback would you prefer?

The investment will give good returns or the investment can potentially generate 6-8 percent returns. Again, as a rational person, you would probably use the latter information. This brings us to the most important part of choosing an investment. Return calculation.

Now, this is where most investors start falling asleep. What is meant by Compound Annual Growth Rate (CAGR)? Is it the same thing as simple interest? What is the concept of compounding?

Due to all this confusion, you are not only unable to calculate the returns, but it can also be difficult to compare the returns of different instruments. We can make it easier for you by sharing the right amount of information on return calculations.

The main objective of saving and investing money is to preserve and increase the amount invested. For this purpose, it is important to calculate the return on your mutual fund investments correctly.

Disclaimer: Content Produced by Edelweiss Mutual Fund