CAGR Calculator
Find the compound annual growth rate (CAGR) of an investment, a property or a business: the steady yearly rate that takes the starting value to the ending value.
Going from ₹1,00,000 to ₹2,50,000 in 7 years is the same as growing 13.99% every year.
CAGR suits one investment in and one value out. For SIPs or several deposits and withdrawals at different dates, use XIRR.
What is CAGR?
CAGR (compound annual growth rate) is the single yearly growth rate that would take an investment from its starting value to its ending value, if it had grown at the same pace every year. Real returns go up and down; CAGR smooths them into one comparable number.
CAGR formula
CAGR = (Ending value ÷ Starting value)1 ÷ years − 1
Worked example
An investment of ₹1,00,000 grows to ₹2,50,000 in 7 years:
- Ending ÷ starting = 2.5
- 2.51/7 = 1.1399
- CAGR = 13.99% a year; the absolute return is 150%
CAGR vs absolute return
Absolute return is the total gain as a percentage, with no time attached: 150% in the example. CAGR spreads it over the years, so you can compare a 7-year investment with a 3-year one, or with an FD rate.
When CAGR is the wrong measure
- SIPs and regular investments. Money goes in on many dates, so use XIRR instead.
- Very short periods. CAGR over less than a year exaggerates swings.
- Risk. Two funds with the same CAGR can have very different ups and downs along the way.
When to use a different calculator
- Measuring SIP returns or several cash flows? Use the XIRR Calculator.
- Projecting a one-time investment forward? Use the Lumpsum Calculator.
- Checking a mutual fund’s returns? Use the Mutual Fund Returns Calculator.
