CAGR Calculator
CAGR (Compound Annual Growth Rate) is the single, smoothed annual rate that would take a starting value to an ending value over a given period — it is the standard way to compare investment returns, mutual fund performance, or business growth across different time periods, since it accounts for the effect of compounding rather than just averaging yearly changes.
- CAGR = (₹2,00,000 ÷ ₹1,00,000)^(1÷5) − 1 = 14.87%
Read the guide: Rule of 72: How to Know When Your Money Doubles
How to use the cagr calculator
- Enter the starting value (what you began with) and the ending value (what it grew to).
- Enter the number of years between the two values — fractional years (like 2.5) are allowed.
- Read the CAGR as a single, smoothed annual percentage.
Formula
CAGR = (Ending Value ÷ Beginning Value)(1 ÷ Years) − 1, expressed as a percentage.
Worked examples
A mutual fund investment
₹1,00,000 growing to ₹2,00,000 over 5 years: CAGR = (2,00,000 ÷ 1,00,000)^(1/5) − 1 ≈ 14.87% per year — even though the total return is 100%, the smoothed annual rate is under 15% because of compounding.
Comparing two investments fairly
A fund that doubled in 5 years (CAGR ≈ 14.87%) actually grew faster per year than one that tripled in 10 years (CAGR ≈ 11.61%) — CAGR lets you compare returns over different time periods on equal footing, which a simple total-return percentage cannot do.
CAGR vs XIRR, and why CAGR alone can hide volatility
CAGR assumes a single lump sum growing smoothly from a start value to an end value — it works cleanly for a one-time investment, but not for money added or withdrawn at different times (like a SIP or irregular deposits/withdrawals). For those cases, investors use XIRR (Extended Internal Rate of Return), which accounts for the exact dates and amounts of each cash flow. If you invested through a SIP rather than a lump sum, CAGR calculated naively on the total invested and total value will overstate or understate your real return — XIRR (available in most portfolio-tracking apps and spreadsheet software via the XIRR function) is the correct tool for that case.
A single CAGR figure can also hide a genuinely bumpy ride: two investments with the identical 5-year CAGR could have had completely different year-by-year paths — one steady, one with a sharp crash and recovery. CAGR tells you the destination, not the journey; if volatility matters to you (for example, near retirement), look at year-by-year returns or a volatility/drawdown measure alongside CAGR, not instead of it.
Common mistakes to avoid
- Confusing CAGR with the simple average of yearly returns — a year of +50% followed by a year of −50% averages to 0%, but the actual CAGR is negative (you end up with less money than you started with), because percentage losses and gains are not symmetric.
- Using CAGR to predict future returns — it describes what happened between two specific points, smoothing over any volatility in between; the actual year-to-year path could have included sharp ups and downs even with a steady CAGR.
- Comparing CAGR figures calculated over very different time periods without noting the difference — a 5-year CAGR and a 20-year CAGR answer different questions.
Frequently asked questions
What is a good CAGR for an investment?
It depends entirely on the asset class and time period — equity mutual funds might target 10–15% CAGR over long periods, while fixed-income instruments typically show lower, steadier CAGR. There is no universal "good" number; compare CAGR against a relevant benchmark or alternative.
Is CAGR the same as annualised return?
Yes — CAGR is one common name for the annualised (per-year) growth rate implied by a start and end value, especially when used for investments or business metrics.
Can CAGR be negative?
Yes — if the ending value is lower than the beginning value, CAGR will be negative, showing the annual rate of decline over the period.
Does CAGR account for money added or withdrawn during the period?
No — this calculator assumes a single lump sum growing from the beginning value to the ending value with no additional deposits or withdrawals in between. For regular monthly investments, use the SIP calculator instead.
Sources: SEBI Investor Website