CAGR Calculator – Compound Annual Growth Rate
CAGR = (Final / Initial)1/Years − 1
What is CAGR?
CAGR (Compound Annual Growth Rate) is the steady yearly rate at which an investment would have grown from its starting value to its ending value, assuming profits were reinvested each year. It smooths out the ups and downs, which makes it useful for comparing mutual funds, stocks, businesses or salaries over different time periods.
Formula
CAGR = (Final Value ÷ Initial Value)1 ÷ Years − 1. Multiply by 100 for a percentage.
Worked example
You invest ₹1,00,000 and it grows to ₹2,00,000 in 5 years. Dividing gives 2, and 2 raised to the power 1/5 is about 1.1487, so the CAGR is about 14.87% per year.
Another example: ₹50,000 growing to ₹1,25,000 over 8 years gives a CAGR of about 12.14%.
Frequently asked questions
Is CAGR the same as average annual return?
No. An average return adds yearly returns and divides by the number of years, while CAGR accounts for compounding. It gives the single constant rate that would produce the same ending value.
Can CAGR be negative?
Yes. If the final value is lower than the initial value, the CAGR is negative.
When should I use XIRR instead of CAGR?
Use CAGR for one lump sum. If you invest at different times, such as monthly SIPs, use the XIRR calculator.
What are the limitations of CAGR?
It hides volatility and ignores money added or withdrawn during the period. Two investments can share a CAGR but have very different paths.
Related calculators
XIRR Calculator · SIP Calculator · Compound Interest Calculator
Results are estimates for information only and are not financial, tax or legal advice.