CAGR Calculator
Calculate the Compound Annual Growth Rate (CAGR) of an investment, or find the future/present value.
CAGR
—
Absolute Return
—
Total Gain
—
What is CAGR Calculator?
CAGR (Compound Annual Growth Rate) measures the mean annual growth rate of an investment over a specified period longer than one year, assuming profits are reinvested. It is the single most useful metric for comparing the historical performance of different investments, mutual funds, or business revenues on an equal footing.
How to use
- 1 Enter the beginning value of your investment or business metric.
- 2 Enter the ending value after the growth period.
- 3 Enter the number of years between the two values.
- 4 The calculator shows the CAGR percentage, absolute return, and total monetary gain instantly.
- 5 Use the CAGR to compare this investment against other options or benchmarks.
Formula
Example calculation
An investment that grows from ₹1,00,000 to ₹2,50,000 over 5 years has a CAGR of approximately 20.1%. This means the investment grew at a steady rate of 20.1% per year on a compounded basis, even if actual year-to-year returns varied widely.
Frequently asked questions
What is a good CAGR for an investment?
A CAGR above the rate of inflation (typically 5–7% in India) represents real growth. Equity mutual funds targeting 12–15% CAGR over 10+ years are considered good. Fixed deposits offer 6–7% CAGR with much lower risk.
What is the difference between CAGR and absolute return?
Absolute return is the total percentage gain regardless of time (e.g., 150% over 5 years). CAGR normalises this into an annual rate (20.1% per year), making it far more useful for comparing investments of different durations.
Can CAGR be negative?
Yes. If the ending value is lower than the beginning value, CAGR is negative, indicating a loss on an annualised basis. This is common for investments that lost money over the measured period.
Does CAGR account for volatility?
No. CAGR assumes smooth, steady growth and ignores year-to-year fluctuations. Two investments with identical CAGRs can have very different risk profiles. Always review volatility (standard deviation or Sharpe ratio) alongside CAGR.
How is CAGR different from IRR?
CAGR measures growth of a single lump-sum investment. IRR (Internal Rate of Return) handles multiple cash flows at different times, making it more appropriate for evaluating projects with periodic investments or withdrawals, like SIPs.