What does it mean?
How your money could grow over the years and if you’re on the right path.
How does it work?
It takes your current net worth, adds your yearly savings, and applies expected returns to show how your wealth compounds over time.
Formula:
CurrentNetWorth - Your assets minus liabilities today
r - Expected annual investment return
t - Number of years in the future
AnnualSavings - The net amount you add each year.
Future Net Worth = (Current Net Worth × (1+r) ^ t ) + ( Annual Savings × ((1+r)^t−1 / r))
CAGR=(Future Net Worth / Current Net Worth) ^ 1/t − 1
Example:
Your net worth is ₹50 lakh. You save ₹5 lakh each year and expect 8% growth. In 10 years, that becomes around ₹1.1 crore.
FOLO Tip: See if your wealth is growing faster than inflation, considering your asset allocation and risk profile.
