What is the formula for compound annual growth rate monthly?

To calculate the monthly compound annual growth rate (CAGR) on an investment, the formula is:

Monthly CAGR = (Ending Value/Beginning Value)^(1/n) - 1

Where:

• Ending value is the future value of the investment
• The beginning value is the initial investment amount
• n is the number of months the investment was held

For example, if you invested ₹20,000 in a mutual fund in January 2019, and it grew to ₹35,000 by December 2024, the monthly CAGR would be:

Monthly CAGR = (35,000/20,000)^(1/60) - 1 = 1.75^(1/60) - 1 ≈ 0.0109 or 1.09%

So, the monthly CAGR for the investment is approximately 1.09%. This means that the investment grew by an average of 1.09% each month over the 5-year period.