CAGR Calculator
Calculate the Compound Annual Growth Rate (CAGR) of any investment. Instantly find annual returns, absolute gains, and year-wise growth projections.
Calculate Compound Annual Growth Rate
Enter your investment values to find the CAGR. Works for mutual funds, stocks, FDs, real estate, or any asset class.
What is CAGR (Compound Annual Growth Rate)?
CAGR is the rate at which an investment grows from its initial value to its final value over a given time period, assuming profits are reinvested each year. It represents a "smoothed" annual growth rate, ignoring volatility.
CAGR Formula
CAGR = (Final Value / Initial Value) ^ (1 / Years) - 1
Multiply by 100 to get the percentage. For example, if ₹1,00,000 grows to ₹2,50,000 in 5 years, the CAGR = (2.5)^0.2 - 1 = 20.11% per year.
Why CAGR Matters for Indian Investors
- Mutual Funds: Compare the CAGR of different schemes to find the best performers
- Stocks: Calculate portfolio CAGR to benchmark against Nifty/Sensex
- Real Estate: Evaluate property appreciation over time
- Fixed Deposits: Compare with other investment options
CAGR vs Absolute Return
- Absolute Return tells the total gain (e.g., 150% over 5 years)
- CAGR tells the yearly equivalent gain (e.g., 20.11% per year)
- CAGR is more useful for comparing investments of different time periods
- Always use CAGR when comparing investments held for different durations
Good CAGR Benchmarks
- Nifty 50 (10-year): ~12-14% CAGR
- Small Cap Funds: ~15-18% CAGR (higher risk)
- Fixed Deposits: ~6-7% CAGR (low risk)
- PPF: ~7.1% CAGR (tax-free)
- Real Estate (metro): ~8-10% CAGR
Worked Example: Comparing Two Investments
Suppose Fund A grew ₹1,00,000 to ₹1,80,000 in 4 years, and Fund B grew ₹1,00,000 to ₹2,10,000 in 6 years. At first glance Fund B made more money, but CAGR reveals the truer comparison. Fund A: (1.8)^(1/4) − 1 = 15.8% per year. Fund B: (2.1)^(1/6) − 1 = 13.2% per year. Despite the larger absolute gain, Fund B actually grew more slowly each year — exactly the kind of insight CAGR is designed to surface when time periods differ.
When CAGR Can Mislead You
CAGR smooths returns into a single steady rate, which hides volatility. Two investments can share the same CAGR while one rose calmly and the other swung wildly with deep drawdowns — a crucial difference for your risk tolerance. CAGR also only considers the start and end values, so it ignores everything that happened in between, including the worst year. For this reason, pair CAGR with a measure of volatility (such as standard deviation or maximum drawdown) before judging an investment.
CAGR vs XIRR for SIPs
CAGR assumes a single lump-sum investment held to the end. If you invest gradually — for example through a monthly SIP — each instalment is held for a different length of time, so plain CAGR no longer fits. In that case XIRR (which accounts for the date and size of every cash flow) is the correct measure of your annualised return. Use CAGR for one-time investments and XIRR for regular, multi-date contributions.
Frequently Asked Questions — CAGR Calculator
CAGR (Compound Annual Growth Rate) measures the rate at which an investment grows from its starting to ending value over a number of years, assuming profits are reinvested annually. It is the most useful metric for comparing investments held over different periods because it smooths out year-to-year volatility into a single representative rate.
CAGR = (Final Value ÷ Initial Value)^(1÷n) − 1, where n is the number of years. Example: ₹1,00,000 grew to ₹2,01,136 in 5 years → CAGR = (2,01,136 ÷ 1,00,000)^(0.2) − 1 = 15% per year. This calculator applies the formula automatically.
Absolute return is the total percentage gain over the full period (e.g., 150% over 10 years). CAGR converts that into an annualised rate (e.g., 9.6% per year). CAGR is far more useful for comparison — a 150% gain in 5 years (20.1% CAGR) is vastly superior to a 150% gain in 20 years (4.7% CAGR).
Reference benchmarks: PPF ~7.1% CAGR (government-guaranteed, tax-free); Bank FDs ~6.5–7.5% CAGR (taxable); Nifty 50 index ~12–14% CAGR over 10 years; large-cap mutual funds ~12–16% CAGR; small-cap funds ~15–20% CAGR (higher risk and volatility). India's average inflation is ~5–6%, so aim for CAGR well above this threshold.
Yes. If the final value is less than the initial value, CAGR is negative. Example: a stock fell from ₹100 to ₹64 over 4 years → CAGR = (64÷100)^(0.25) − 1 = −10.8% per year. A negative CAGR signals capital erosion on an annualised basis.
CAGR measures growth between just two points (start and end value) and ignores any intermediate cash flows. IRR accounts for multiple cash flows at different times, making it suitable for SIP investments or projects with periodic inflows/outflows. For a single lump-sum investment with no intermediate cash flows, CAGR and IRR produce identical results.