CAGR Calculator
About the CAGR Calculator
CAGR (Compound Annual Growth Rate) is the steady annual rate at which an investment would have grown from its starting value to its ending value, as if it compounded smoothly each year. It is a clean way to compare investments held for different lengths of time.
Enter the initial value, the final value and the number of years, and the calculator returns the annualised growth rate.
Frequently asked questions
How is CAGR calculated?
CAGR = ((Final value ÷ Initial value) ^ (1 ÷ number of years) − 1) × 100. For example, ₹1,00,000 growing to ₹2,00,000 over 5 years is a CAGR of about 14.9%.
What is the difference between CAGR and absolute return?
Absolute return is the total percentage gain regardless of time; CAGR converts that into a per-year rate, so it accounts for how long you stayed invested. Doubling your money in 2 years and in 10 years is the same absolute return but very different CAGR.
Does CAGR show the actual year-by-year returns?
No. CAGR is a smoothed average — it assumes steady growth and hides the ups and downs in between. Real returns may have been volatile even if the CAGR looks steady.
When should I use CAGR instead of XIRR?
Use CAGR for a single lumpsum with one start and one end value. If you made multiple investments or withdrawals on different dates (like a SIP), use XIRR instead, which accounts for the timing of each cash flow.
Is a higher CAGR always better?
A higher CAGR means faster growth, but it should be weighed against risk — riskier assets can show a high CAGR over good periods and poor returns over bad ones. Read CAGR alongside the risk taken.