investingreturnscagr
What is CAGR? The only growth number that matters
Compound Annual Growth Rate explained — why it beats absolute returns for comparing investments, with a simple worked example.
What CAGR actually measures CAGR is the single annual growth rate that would take an investment from its starting value to its ending value, as if it grew smoothly every year.
Why not just use total return? A 150% total return sounds great — until you learn it took 15 years. CAGR annualises the gain so you can compare investments of different lengths on equal footing.
A quick example ₹1,00,000 growing to ₹2,50,000 over 5 years is a 150% total return, but only about a 20% CAGR. That single number lets you compare it directly against a fixed deposit or another fund.
The catch CAGR is a smoothed average — it hides the bumpy ride. Two investments with the same CAGR can have very different year-to-year volatility.
Try the tool
CAGR Calculator
About the author
Dhirendra Bisht
Founder & Lead Engineer, FinCalcHub
Dhirendra Bisht is the founder and lead engineer of FinCalcHub. He designs and maintains the single, tested financial-formula library that powers every calculator on the site, and reviews each tool’s methodology against primary sources such as the RBI, SEBI, EPFO and the Income Tax Department. His focus is making financial maths transparent and accurate — with clear worked examples rather than black-box results.