CAGR Calculator

What Is CAGR?

CAGR stands for Compound Annual Growth Rate. It represents the smoothed, annualised rate of return that an investment would have earned if it had grown at a steady rate every year. In reality, investments fluctuate — some years deliver 30% returns, others might lose 10% — but CAGR gives you a single number that captures the overall growth trajectory.

Think of CAGR as the answer to the question: “If my investment grew at the same rate every single year, what would that rate be to get from my starting value to my ending value?”

How the Calculator Works

This calculator uses the standard CAGR formula:

CAGR = (Ending Value / Beginning Value)^1/n − 1

Where:

Ending Value = the final value of your investment

Beginning Value = the initial value of your investment

n = the number of years

Enter your beginning value, ending value, and the number of years. The calculator computes the CAGR, total return percentage, and absolute profit.

Example Calculation

Example 1: You invested ₹1,00,000 and it grew to ₹3,00,000 over 5 years.

Beginning Value: ₹1,00,000

Ending Value: ₹3,00,000

Time Period: 5 years

CAGR = (3,00,000 / 1,00,000)^1/5 − 1

CAGR = (3)^0.2 − 1

CAGR = 24.57% per year

Example 2: You invested ₹5,00,000 and it became ₹8,00,000 in 3 years.

Beginning Value: ₹5,00,000

Ending Value: ₹8,00,000

Time Period: 3 years

CAGR = (8,00,000 / 5,00,000)^1/3 − 1

CAGR = (1.6)^0.333 − 1

CAGR = 16.96% per year

How to Use This Calculator

Enter the Beginning Value — the amount you initially invested or the starting value of your portfolio.
Enter the Ending Value — the current or final value of your investment.
Enter the Number of Years — the time period over which your investment grew.
Click Calculate CAGR to see your annualised return, total return percentage, and absolute profit.

CAGR vs Absolute Returns

Absolute return tells you the total percentage gain over the entire period, while CAGR tells you the annual rate. The difference matters a lot when comparing investments held for different durations.

Scenario: An investment of ₹1,00,000 grew to ₹3,00,000 in 5 years.

Absolute Return: 200% — sounds impressive!

CAGR: 24.57% per year — gives the real annual picture.

A 200% return over 5 years is very different from 200% over 20 years. Absolute returns hide the time factor. CAGR reveals it.

When to Use CAGR

Comparing investments with different time periods: A fund that returned 80% in 3 years vs one that returned 150% in 7 years — which performed better annually? CAGR answers this instantly.
Evaluating mutual fund performance: Fund houses report 1-year, 3-year, 5-year, and 10-year CAGR. Use these to compare funds on an apples-to-apples basis.
Benchmarking against inflation: If your investment’s CAGR is 8% and inflation averages 6%, your real return is only about 2% per year.
Setting realistic expectations: Historical Nifty 50 CAGR over long periods is around 12–14%. Use this as a baseline when projecting future returns.

Limitations of CAGR

Hides volatility: CAGR doesn’t show the ups and downs along the way. An investment could swing wildly — up 50% one year, down 30% the next — but still show a smooth CAGR. Two investments with the same CAGR can have very different risk profiles.
Doesn’t account for intermediate cash flows: If you made additional investments (like SIPs) or withdrew money during the period, CAGR won’t capture those. For such cases, you need XIRR (Extended Internal Rate of Return).
Assumes a single lump sum: CAGR works best for a single investment made at one point and measured at another. It’s not designed for portfolios with regular contributions.
Past performance caveat: A high historical CAGR does not guarantee the same returns in the future. Always consider current market conditions and fundamentals.

CAGR is the most honest way to compare investment performance across different time periods. Use it to cut through marketing hype and see what your money actually earned per year.