CAGR Calculator

Find the Compound Annual Growth Rate (CAGR) of your investments over any period of years.

Parameters
₹
₹
Yrs
Calculated Results
Compound Annual Growth Rate (CAGR)-
Absolute Return-

Understanding CAGR (Compound Annual Growth Rate)

CAGR, the compound annual growth rate, is the single steady annual rate at which an investment would have had to grow, compounding every year, to turn its starting value into its ending value. The formula is (final value / initial value)^(1 / years) - 1, and its job is to make investments held for different lengths of time comparable. If ₹1 lakh becomes ₹2.5 lakh in 5 years, the CAGR is about 20.1%: not because the fund rose exactly 20.1% each year, but because that steady rate reproduces the same end value.

CAGR is not the same as absolute return, which measures the total change ignoring time: ₹1 lakh growing to ₹2.5 lakh is a 150% absolute return, whether it took 5 years or 10. Annualising is what makes comparisons fair: that 2.5x works out to a 20.1% CAGR over 5 years but only about 9.6% over 10. For a one-time investment such as a lump sum, CAGR is usually the headline number, and the calculator shows the absolute return alongside it.

Two limitations are worth knowing. CAGR assumes a single investment at the start and a single value at the end, so it cannot digest money added or withdrawn in between, a SIP needs XIRR instead, computed by the sibling XIRR calculator; our guide to CAGR vs XIRR explains when each measure applies. And CAGR is a nominal figure: a 12% CAGR with 6% inflation works out to only about a 5.7% real return, which is the part that actually grows your purchasing power.

Popular CAGR Calculations

Click on any of the popular search scenarios below to load the calculator with pre-configured values:

Frequently Asked Questions

What is the difference between CAGR and absolute return?
Absolute return is the total percentage change, ignoring time: ₹1 lakh growing to ₹2.5 lakh is a 150% absolute return. CAGR spreads that gain evenly across the holding period, so the same 2.5x is about 20.1% a year over 5 years but only about 9.6% a year over 10. When two investments have been held for different periods, compare CAGR, absolute return alone can make a slow investment look competitive.
CAGR vs XIRR, which one should I use?
Use CAGR when there is one investment at the start and one final value; use XIRR when money moves in or out on different dates. CAGR ignores interim cash flows entirely, so a SIP cannot be measured with it, its instalments enter at different times, and the XIRR calculation weights each one by the days it stayed invested. For a single lump sum invested and redeemed on two dates, both methods give the same annual rate.
What is a good CAGR for mutual funds in India?
Long-run equity assumptions in India are usually 10-12% a year, while debt funds are generally modelled around 7-8%, so those ranges are a useful sanity check rather than a promise for any given period. A fund showing a 25% CAGR over 3 years may simply have caught a bull run and can give much of it back. Judge a number against its fund category and the market phase it covers, and give more weight to rolling 5-10 year figures than to a single hot stretch.

Formula & Mathematical Approach

Calculates the Compound Annual Growth Rate (CAGR) between an initial and final value.

CAGR=(Final ValueInitial Value)1Years−1\text{CAGR} = \left(\frac{\text{Final Value}}{\text{Initial Value}}\right)^{\frac{1}{\text{Years}}} - 1
Show Plain Text / Excel Formula
CAGR = (Final Value / Initial Value) ^ (1 / Years) - 1

Key Assumptions

  • Annual compounding is assumed.
  • No cash flows occur between the initial and final dates.