CAGR Calculator
CAGR (Compound Annual Growth Rate) is the steady annual rate at which an investment would have grown from its starting value to its final value, as if it compounded at the same rate every year. It smooths out the ups and downs of real returns into a single, comparable number. Use this CAGR calculator to find the annualised return on any investment — enter the initial value, the final value and the holding period to see the CAGR and your total gain instantly.
- Total Gain
- ₹1,00,000
- Absolute Return
- 100%
CAGR
7.18%
- Initial Value50%
- Total Gain50%
Formula
CAGR = (Final Value ÷ Initial Value)^(1 ÷ n) − 1
- Initial Value
- The amount you started with (your investment at the beginning).
- Final Value
- The value at the end of the period.
- n
- The number of years the investment was held.
CAGR assumes growth is compounded once a year. It describes the average annualised rate over the whole period — it does not mean the investment actually returned that exact figure in any single year.
Worked example
Suppose you invested ₹1,00,000 in a mutual fund and it grew to ₹2,00,000 over 10 years. What is the compound annual growth rate?
- Initial Value
- ₹1,00,000
- Final Value
- ₹2,00,000
- Time Period (n)
- 10 years
Applying CAGR = (2,00,000 ÷ 1,00,000)^(1 ÷ 10) − 1 gives about 7.18% per year. Your money doubled — a 100% total (absolute) return — which works out to a 7.18% compound annual growth rate over the 10 years, with a total gain of ₹1,00,000.
How the CAGR calculator works
Enter your initial value, final value and the number of years you held the investment. The calculator applies the CAGR formula and shows the annualised growth rate along with your total gain and absolute return. It’s the quickest way to compare how two investments really performed once you strip out the effect of different holding periods.
Why CAGR matters
Raw returns can be misleading. An investment that grew 100% sounds impressive until you learn it took 15 years. CAGR puts every investment on the same footing — a single annual rate — so you can compare a fixed deposit, a mutual fund and a stock on equal terms. It’s the standard way fund houses and analysts report long-term performance.
When to use CAGR (and when not to)
- Use CAGR for a lump-sum investment with one entry and one exit value — stocks, mutual fund units, property, or any single asset held over time.
- Don’t use CAGR when you’ve invested in instalments or made withdrawals along the way. Multiple cash flows on different dates need XIRR, which weights each flow by its timing.
- Pair it with risk — two investments with the same CAGR can have very different volatility. CAGR tells you the destination, not how bumpy the ride was.
Frequently asked questions
What is CAGR?
CAGR, or Compound Annual Growth Rate, is the constant annual rate of return that would take an investment from its starting value to its ending value over a given period, assuming the gains are reinvested and compounded once a year. It turns an uneven return into a single smooth annual figure.
How is CAGR different from absolute return?
Absolute return is the total percentage gain over the whole period, ignoring time. CAGR annualises that gain. For example, doubling your money is always a 100% absolute return, but the CAGR is about 14.87% if it took 5 years and only about 7.18% if it took 10 years — the longer it takes, the lower the annualised rate.
Is a higher CAGR always better?
A higher CAGR means faster compounding, but you should also weigh the risk taken to achieve it. A volatile investment may post a high CAGR over one period and a negative one over another. CAGR is best used to compare similar investments over the same time horizon.
Does CAGR account for additional investments?
No. CAGR assumes a single starting amount and a single ending amount. If you invested in instalments (like a monthly SIP), use a SIP calculator or an XIRR calculation instead, since those account for multiple cash flows on different dates.
Can CAGR be negative?
Yes. If the final value is lower than the initial value, the CAGR is negative, showing the average annual rate at which the investment lost value over the period.