CAGR Calculator
Compound annual growth rate
Investment Details
CAGR Analysis
About CAGR Calculator
Compound Annual Growth Rate (CAGR) is the most accurate way to measure investment performance over time. It represents the mean annual growth rate, smoothing out volatility to give you a clear picture of returns. Unlike absolute returns which ignore time, CAGR accounts for the investment period and provides a standardized metric for comparing different investments.
Use our CAGR calculator to compare mutual funds, stocks, or any investment that has grown over multiple years. Perfect for financial planning and investment analysis. Whether you're evaluating your portfolio's performance, comparing two different investment options, or planning for retirement, CAGR gives you the apples-to-apples comparison you need.
Our calculator also shows Total Return and Absolute Return, giving you a comprehensive view of your investment's performance. Understanding CAGR helps you make informed decisions about where to invest your money for long-term wealth creation.
How to Use This CAGR Calculator
Step 1: Enter your Starting Value — the initial amount you invested (lump sum).
Step 2: Enter your Ending Value — the final amount your investment has grown to.
Step 3: Enter the Number of Years — the total investment period.
Step 4: Click Calculate CAGR to see your compound annual growth rate.
Step 5: Use the Reset button to clear all inputs and analyze a different investment.
Why CAGR is the Gold Standard for Investment Analysis
✓ Smooths Market Volatility
CAGR ignores annual fluctuations and provides a steady average return. Perfect for comparing investments with different volatility patterns.
✓ Compares Different Time Periods
A 3-year investment with 40% return vs 5-year with 50% return — CAGR tells you which performed better annually.
✓ Standardized Metric
Mutual fund houses and stock exchanges use CAGR as the standard performance metric. Easy to compare across schemes.
✓ Long-term Planning
Use historical CAGR to estimate future wealth. Plan retirement, children's education, and major purchases with realistic projections.
Real-World CAGR Examples
Example 1: Mutual Fund Performance
Investment: ₹50,000 in an equity fund | After 7 years: ₹1,20,000 | CAGR = (1,20,000/50,000)^(1/7)-1 = 13.4% | Total Return = 140% | Beats typical FD returns of 6-7% significantly.
Example 2: Stock Market Investment
Investment: ₹2,00,000 in blue-chip stocks | After 10 years: ₹5,00,000 | CAGR = (5,00,000/2,00,000)^(1/10)-1 = 9.6% | Though below market averages, still better than debt funds.
Example 3: Business Growth
Business revenue: ₹10 lakhs in Year 1 | Revenue after 5 years: ₹30 lakhs | CAGR = (30/10)^(1/5)-1 = 24.6% | Exceptional growth rate, indicating successful scaling.
CAGR Formula
CAGR = (End Value ÷ Start Value)^(1 ÷ Years) - 1 × 100
Example: ₹10,000 to ₹25,000 in 5 years = (25,000/10,000)^(1/5) - 1 = 20.11% CAGR
Formula breakdown: End Value/Start Value = Growth factor | 1/Years = Annualizing | -1 = Convert to percentage
Expected CAGR by Investment Type
| Investment Type | Expected CAGR | Risk Level |
|---|---|---|
| Equity Mutual Funds | 12-15% | High |
| Direct Stocks | 15-20% | Very High |
| Hybrid Funds | 9-11% | Moderate |
| Debt Funds | 7-8% | Low |
| Fixed Deposits | 6-7% | Very Low |
| PPF/EPF | 7-8% | Negligible |
Important Limitations of CAGR
- ⚠️Assumes steady growth: CAGR smooths out volatility and doesn't show year-to-year fluctuations. An investment with 15% CAGR could have negative years and highly positive years.
- ⚠️Not for SIPs: CAGR assumes lump sum investment with no intermediate cash flows. Use XIRR for SIP calculations.
- ⚠️Past ≠ Future: Historical CAGR doesn't guarantee future returns. Markets change, funds change managers, economic conditions evolve.
- ⚠️No risk measure: CAGR alone doesn't tell you about risk. Two funds with 12% CAGR can have vastly different risk profiles.