CAGR Calculator
Calculate the Compound Annual Growth Rate of any investment from its initial value, final value, and holding period. Get CAGR, absolute return, total growth, and growth multiple — for stocks, mutual funds, and property.
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How CAGR Calculator Works
What is CAGR?
CAGR (Compound Annual Growth Rate) is the annual rate at which an investment would have grown if it had compounded at a steady pace every year. It converts any investment outcome — a stock held for 7 years, a mutual fund held for 42 months, a property held for a decade — into a single annualized percentage that can be compared directly against FD rates, index returns, or inflation.
CAGR smooths out the ups and downs of the journey and answers one question: what constant yearly return would have produced this result? That makes it the standard metric for comparing investments across different time horizons.
CAGR Formula
CAGR = [(FV ÷ IV)1/t − 1] × 100
Where IV is the initial investment, FV is the final value, and t is the investment period in years.
Worked Example
₹1,00,000 grows to ₹2,00,000 in 5 years:
- Growth multiple = 2,00,000 ÷ 1,00,000 = 2.0×
- CAGR = (2.0)1/5 − 1 = 1.1487 − 1 ≈ 14.87%
- Absolute return = 100% (money doubled)
- Total growth = ₹1,00,000
Even though the money doubled (100% absolute return), the annualized growth rate is 14.87% — that is the number to compare against an FD at 7% or the Nifty’s long-term average of ~12%.
CAGR vs Absolute Return
| Metric | What It Measures | Limitation |
|---|---|---|
| Absolute Return | Total % gain over the full period | Ignores time — 100% in 3 years and 100% in 12 years look identical |
| CAGR | Annualized growth rate | Hides volatility — the actual path may have had large swings |
Example: your investment doubled (100% absolute return). If that took 3 years, the CAGR is 26% — exceptional. If it took 12 years, the CAGR is 5.9% — below most bank FD rates. Absolute return without the time dimension is meaningless for comparison.
Interpreting Your CAGR (Indian Context)
| CAGR | Interpretation | Benchmark |
|---|---|---|
| Below 0% | Negative return — investment lost value | — |
| 0% – 6% | Below inflation — wealth eroding in real terms | Savings account: 3–4% |
| 6% – 8% | Capital preservation | Bank FD: 6.5–7.5% |
| 8% – 12% | Healthy growth | Nifty 50 long-term: ~12% |
| 12% – 18% | Beating the market | Top equity funds: 12–16% |
| Above 18% | Exceptional — verify the period is long enough to be meaningful | — |
Common Mistakes When Using CAGR
- Annualizing very short periods. A 10% gain in 3 months annualizes to a 46% CAGR — mathematically correct but misleading. CAGR is most meaningful for periods of 1 year or longer.
- Using CAGR for SIP investments. CAGR assumes a single lump sum. For monthly investments, each instalment has a different holding period — use the SIP Calculator or XIRR instead.
- Ignoring cash flows. If you added or withdrew money mid-way, plain CAGR is distorted. It only works for a clean start-value-to-end-value comparison.
- Comparing CAGRs over different periods. A 5-year CAGR and a 6-month CAGR are not comparable — always check the underlying time frame.
- Assuming CAGR means steady returns. A fund with a 12% CAGR may have swung between −20% and +40% along the way. CAGR describes the destination, not the ride.
Investment Use Cases
- Mutual fund review: compute the CAGR on your lump-sum fund purchases and compare against the fund’s benchmark index.
- Stock performance: a stock bought at ₹50,000 now worth ₹80,000 after 3 years has a CAGR of 16.96% — comfortably beating the market average.
- Real estate: property that tripled in 10 years sounds impressive but is an 11.61% CAGR — good, though comparable to equity index returns with far less liquidity.
- Should I have used an FD? compare your investment’s CAGR against the guaranteed rate in the FD Calculator or a disciplined monthly plan in the RD Calculator.
- Projecting forward: once you know your historical CAGR, project future values with the Compound Interest Calculator.
CAGR vs Other Return Metrics
CAGR is one of several return measures. Absolute return ignores time — see the Percentage Calculator for quick percentage changes. XIRR handles irregular cash flows (SIPs, top-ups, partial withdrawals) and is what mutual fund statements report for SIP investments. Rolling returns measure consistency by computing CAGR over every possible window. For a single lump-sum investment with no intermediate cash flows, CAGR is the correct and simplest metric.
Accuracy & Sources
Last reviewed: July 2026. Formula source: CAGR = [(FV / IV)^(1/t) − 1] × 100 — standard annualized return formula. All calculations run in your browser. No data is sent to any server.
Frequently Asked Questions
CAGR = [(Final Value ÷ Initial Value)^(1/years) − 1] × 100. For example, ₹1,00,000 growing to ₹2,00,000 in 5 years: (2.0)^(1/5) − 1 = 14.87% CAGR. The formula finds the constant annual growth rate that would turn the initial value into the final value over the given period. Use the calculator above for instant results.
Absolute return is the total percentage gain over the entire period — it ignores time. CAGR annualizes that gain so investments of different durations can be compared. A 100% absolute return (money doubled) is a 26% CAGR if achieved in 3 years, but only 5.9% CAGR if it took 12 years — worse than a bank FD. Always use CAGR when comparing investments held for different lengths of time.
Context matters: bank FDs deliver 6.5–7.5% guaranteed, the Nifty 50's long-term average is around 12%, and top-performing equity mutual funds achieve 12–16% over a decade. A CAGR above 12% means you beat the Indian market average; above 15% is excellent. A CAGR below 6% means your money grew slower than inflation — a real-terms loss.
Yes. If the final value is lower than the initial investment, CAGR is negative. For example, ₹12,00,000 falling to ₹10,00,000 over 2 years is a CAGR of −8.71% — the investment lost about 8.7% of its value per year on an annualized basis. This calculator handles losses and labels the result as a Negative Return.
No. CAGR assumes one lump-sum investment held for the full period. In a SIP, every monthly instalment has a different holding period — the first instalment may be invested for 5 years while the last one for only 1 month. Mutual fund statements use XIRR for SIPs, which correctly weights each cash flow. Use CAGR for lump-sum investments and the SIP Calculator for monthly investment projections.
CAGR extrapolates short-term results to a full year, which exaggerates them. A 10% gain in 3 months becomes a 46% CAGR — implying the growth would repeat every quarter, which is rarely realistic. For periods under a year, quote the absolute return instead, and reserve CAGR for investments held at least 1 year (ideally 3+ years).
No. CAGR only connects the start and end values with a smooth annual rate — it says nothing about the path in between. Two funds can both show a 12% CAGR while one swung between −20% and +40% and the other grew steadily. When comparing investments, check rolling returns and drawdowns alongside CAGR, and remember that a guaranteed 7% FD may suit you better than a volatile 12% if you need the money soon.