CAGR Calculator – Compound Annual Growth Rate Calculator
CAGR (Compound Annual Growth Rate) measures the mean annual growth rate of an investment over a specified time period longer than one year. It smooths out volatility and shows the consistent rate at which your investment would have grown.
Compound Annual Growth Rate
24.57%
₹1,00,000 → ₹3,00,000 over 5 years
Absolute Return: 200.0%
What Your Results Mean
The CAGR percentage tells you the equivalent steady annual growth rate of your investment. It doesn't mean your investment grew by this exact rate every year — it means the overall growth is equivalent to compounding at this rate annually. Use it to compare different investments on equal footing.
What This Calculator Does
Enter the beginning value, ending value, and number of years. The calculator computes the CAGR — the single annual rate at which the beginning value would have grown to the ending value.
How the Calculation Works
CAGR is calculated by finding the geometric mean of annual growth rates. It represents the rate at which an investment grows if it grew at a steady rate each year.
Calculation Logic (Simplified)
CAGR = (Ending Value / Beginning Value)^(1/n) - 1, where n = number of years.Example Calculation
If your investment grew from ₹1,00,000 to ₹3,00,000 over 8 years, the CAGR would be approximately 14.72%.
When to Use This Calculator
- You want to evaluate the annualized performance of a mutual fund or stock over a period
- You need to compare returns across investments held for different durations
- You want a single number that captures total growth adjusted for time
- You're benchmarking a portfolio's performance against an index like Nifty 50
Common Mistakes to Avoid
- Using CAGR for investments with multiple cash flows — use XIRR instead
- Comparing CAGR over very short periods (1–2 years) where it can be misleading
- Confusing CAGR with average annual return — they are mathematically different
- Ignoring that past CAGR doesn't predict future returns
Benefits & Use Cases
- Compare returns across different investments
- Understand true annualized growth rate
- Smooth out year-to-year volatility in analysis
- Evaluate mutual fund and stock performance
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Assumptions and Limitations
Assumptions
- Only two data points are used — the beginning value and the ending value
- Growth is assumed to be compounded annually over the entire period
- No intermediate cash flows (additional investments or withdrawals) are considered
Limitations
- CAGR does not capture volatility — two investments can have the same CAGR but very different risk profiles
- It ignores all cash flows between the start and end dates — SIPs, dividends, and partial withdrawals are not accounted for
- For investments with irregular cash flows, XIRR is a more accurate measure
- CAGR can be misleading for very short time periods or for comparing investments of very different durations
Frequently Asked Questions
What to Do Next
Now that you have your results, explore related tools to refine your financial plan. Try comparing different scenarios or use our other calculators for a more complete picture.
Disclaimer: These calculations are for educational and planning purposes only. Actual investment returns vary based on market conditions, product choice, fees, taxes, and individual circumstances. This tool does not constitute financial advice. Consider consulting a qualified financial advisor for decisions specific to your situation.