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CAGR Calculator

Investment

CAGR smooths volatile returns into a single annual growth rate, making investments easy to compare.

In short: The CAGR Calculator is a free online tool that lets you measure the compound annual growth rate of any investment — instantly, with charts, a worked example and the exact formula.

Your inputs

₹1,00,000
₹1₹10Cr
₹2,50,000
₹1₹10Cr
yrs
140

CAGR

20.11%

Annualised return

Absolute return

150%

Total gain

₹1,50,000

Implied growth path

Value each year at the calculated constant growth rate.

Year-wise value

Year-wise value
YearValueGrowth rate
1₹1,20,11220.11%
2₹1,44,27020.11%
3₹1,73,28620.11%
4₹2,08,13820.11%
5₹2,50,00020.11%

Assumes the CAGR applied evenly each year.

How the CAGR Calculator works

Formula

CAGR = ((End ÷ Start)^(1/n) − 1) × 100
End
Final value
Start
Initial value
n
Number of years

Step-by-step calculation

Worked with the default values.

  1. 1

    Growth ratio

    250000 ÷ 100000

    = 2.500

  2. 2

    Exponent

    1 ÷ 5

    = 0.200

  3. 3

    CAGR

    ((End ÷ Start)^(1/n) − 1) × 100

    = 20.11%

How it works

  • CAGR is the constant annual rate that would take the start value to the end value.
  • It ignores interim volatility, so it is ideal for comparing very different investments.
  • Unlike absolute return, CAGR accounts for the length of the holding period.

Examples

₹1,00,000 growing to ₹2,50,000 in 5 years

CAGR of about 20.1% per year.

Understanding the CAGR Calculator

What CAGR actually measures

Compound Annual Growth Rate is the single, constant annual rate that would take your investment from its starting value to its ending value over a given number of years. Real returns are lumpy — up 30% one year, down 10% the next — but CAGR smooths that path into one clean number. The calculator applies the formula: divide the end value by the start value, raise it to the power of one over the number of years, subtract one, and express it as a percentage.

Why CAGR is so useful

Its power is comparison. Suppose one investment turned ₹1 lakh into ₹2.5 lakh in 5 years and another doubled ₹5 lakh in 4 years. The absolute returns look different and the amounts and periods differ, but their CAGRs put them on the same footing. Because CAGR bakes in compounding and the length of the holding period, it is the standard yardstick for benchmarking funds, stocks and portfolios against each other and against an index.

What affects the CAGR figure

  • Start value — your initial investment.
  • End value — what it grew (or shrank) to.
  • Number of years — the holding period; longer periods dampen the annualised rate.

Note how sensitive CAGR is to the endpoints. A different start or end date can materially change the number, which is why analysts are wary of CAGR cherry-picked over favourable windows.

Common mistakes to avoid

The most frequent error is using CAGR for a SIP or any investment with multiple cash flows — that requires XIRR, which weighs the timing of each instalment. Another is treating CAGR as a guaranteed or realised path: it is a smoothed average, and the actual journey may include steep drawdowns that matter enormously if you needed to sell partway. Finally, remember CAGR is a nominal figure. Subtract inflation to see real growth, and account separately for capital gains tax to know what you actually keep.

Pros

  • Reduces messy, volatile returns to a single, easy-to-grasp annual figure.
  • Enables fair comparison of investments with different sizes and time frames.
  • Accounts for compounding, unlike a simple average return.
  • Widely used and understood, making it a common benchmarking language.
  • Simple to compute from just the start value, end value and number of years.

Cons

  • Hides year-to-year volatility, so two investments with the same CAGR can feel very different.
  • Assumes a single entry and exit — unsuitable for SIPs or multiple cash flows.
  • Ignores inflation and taxes, so it overstates your real, spendable return.
  • Sensitive to the chosen start and end dates, which can be cherry-picked.

Tips

  • 1Use XIRR instead of CAGR whenever there are multiple investments or withdrawals.
  • 2Always compare an investment’s CAGR against a relevant benchmark index.
  • 3Subtract inflation from CAGR to understand your real growth in purchasing power.
  • 4Be wary of CAGR figures over very short periods — they can be misleadingly high or low.
  • 5Pair CAGR with a volatility measure to judge risk, not just return.

Frequently asked questions

Everything you need to know about the CAGR Calculator.

How is CAGR different from absolute return?
Absolute return is the total percentage gain regardless of time. CAGR annualises that gain, so a 150% return over 5 years becomes a ~20% CAGR.
Does CAGR reflect real-world volatility?
No. CAGR is a smoothed average. Actual year-to-year returns can swing widely above and below it.
Can CAGR be negative?
Yes. If your final value is lower than the initial value, the CAGR is negative, showing the average annual rate at which the investment shrank over the period.
Should I use CAGR or XIRR for a SIP?
Use CAGR only for a single lump-sum investment with one entry and one exit. For SIPs or any investment with multiple cash flows on different dates, XIRR is the correct measure because it accounts for the timing of each instalment.
What is a good CAGR for equity investments?
Over long periods, Indian equity indices like the Nifty have delivered a CAGR of roughly 11–13%. A CAGR consistently above the index suggests strong performance, but always compare against a relevant benchmark and the risk taken.
How is CAGR different from average annual return?
A simple average just adds yearly returns and divides by the number of years, ignoring compounding. CAGR reflects the actual compounded growth, so it is always lower than a simple average when returns are volatile.
Does CAGR account for inflation or taxes?
No. CAGR measures nominal growth only. To find your real return, subtract the inflation rate; to find post-tax return, you must separately account for capital gains tax on the profit.
Can I use CAGR to compare two different investments?
Yes, that is one of its main uses. Because CAGR annualises returns over the holding period, it lets you fairly compare investments with different amounts and time frames on a like-for-like basis.

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