CAGR Calculator
Compound Annual Growth Rate Calculator. Find the annualized return of your investment.
Compound Annual Growth Rate
20.11%
Absolute Return
150%
Total Profit
₹1,50,000
How the CAGR Calculator works
Reviewed by Dinesh Babu · Last updated July 2026
CAGR (Compound Annual Growth Rate) is the single smoothed annual rate at which an investment would have grown from its starting value to its ending value if it had grown steadily every year. This calculator takes just three inputs — begin value, end value and the number of years — and returns that one clean per-year figure.
The word 'smoothed' matters. Real investments rarely grow by the same amount each year; equity might jump 30% one year and fall 15% the next. CAGR strips out that year-to-year noise and answers a simpler question: what constant annual rate produces the same final result? That makes it excellent for comparing very different investments — a stock, a fund, a piece of property — over the same period on a like-for-like basis.
Because CAGR only looks at the first and last values, it silently assumes exactly one amount went in at the start and nothing was added or withdrawn in between. The moment you add money midway (as in a SIP), CAGR stops being the right tool — use XIRR instead.
CAGR formula
CAGR = (End Value / Begin Value)^(1 / years) − 1
Multiply the result by 100 to express it as a percentage. Years can be fractional.
What CAGR does and does not tell you
CAGR is a hypothetical. No real investment grows by precisely the CAGR each year — it is a mathematical average of the compounding kind. Two investments can share an identical CAGR while one moved in a smooth line and the other swung violently. CAGR says nothing about that risk or volatility along the way.
It also ignores the path. A portfolio that fell hard in the middle and recovered can post the same CAGR as one that rose steadily, even though your experience holding them would have been completely different.
When CAGR is the right tool
- One-in, one-out investments: a lump sum bought once and valued once at the end.
- Comparing funds or indices over an identical time window.
- Reporting the growth of revenue, users or any single quantity between two dates.
- NOT for SIPs, recurring deposits or any case with multiple contributions — use XIRR there.
| Aspect | CAGR | XIRR |
|---|---|---|
| Cash flows | One in, one out | Many, on any dates |
| Uses exact dates | No — only total years | Yes — every cash flow's date |
| Best for | Lump-sum investments | SIPs, top-ups, withdrawals |
| How it's found | Direct formula | Solved iteratively (like Excel XIRR) |
A stock that doubled in 5 years
You bought ₹1,00,000 of a stock and it is worth ₹2,00,000 after 5 years. CAGR = (2,00,000 / 1,00,000)^(1/5) − 1 = 2^0.2 − 1 ≈ 0.1487, or about 14.9% per year. Notice the answer is well below 20% (which is 100% ÷ 5 years) — that is compounding at work.
Why absolute return misleads
A fund that turned ₹1,00,000 into ₹1,60,000 gained 60% in absolute terms. Over 3 years that is a CAGR of (1.6)^(1/3) − 1 ≈ 16.9%; over 8 years the same 60% gain is only ≈ 6.1% CAGR. Same total profit, very different quality — which is exactly why CAGR beats headline return numbers.
Common mistakes to avoid
- Confusing CAGR with average return. Averaging yearly percentages (say +50% and −50%) gives 0%, but the real CAGR is negative — ₹100 rises to ₹150 then falls to ₹75, a loss.
- Using CAGR for SIPs. Since money enters on many dates, CAGR based on total-invested vs final-value is meaningless; XIRR is the correct measure.
- Reading CAGR as a guarantee of steady yearly gains. It is a backward-looking smoothed rate, not a promise of what any single future year will do.
- Ignoring the time period. A high CAGR over 1 year is far less reliable than a modest CAGR sustained over 10 years.
Frequently asked questions
What is a good CAGR?+
It depends entirely on the asset class. For Indian equity over the long term, roughly 10–12% is often considered good; for debt instruments, lower. Always compare a CAGR against a relevant benchmark and over a meaningful period — a high one-year number tells you very little.
How is CAGR different from absolute return?+
Absolute return is the total percentage gain over the whole period regardless of time. CAGR converts that into a per-year rate, so investments held for different durations can be compared fairly. A 60% absolute gain is impressive in 3 years but poor over 15.
CAGR vs XIRR — what's the difference?+
CAGR assumes a single investment and a single exit, so it only needs a start value, end value and number of years. XIRR handles many cash flows on different dates (like monthly SIPs), so it is the correct measure whenever you add or withdraw money over time.
Can CAGR be negative?+
Yes. If the end value is lower than the begin value, CAGR is negative, representing the steady annual rate of decline. For example ₹1,00,000 falling to ₹80,000 over 4 years is about −5.4% CAGR.
Does CAGR account for the ups and downs in between?+
No. CAGR only looks at the first and last values and smooths everything in between into one rate. Two investments with wildly different volatility can have the same CAGR, so it says nothing about the risk you took along the way.
Can I use CAGR for my SIP returns?+
No. Because a SIP invests on many different dates, there is no single 'begin value'. Comparing total invested against final value and treating it as CAGR overstates or understates the true return. Use XIRR, which weights every instalment by its date.
Do the years have to be whole numbers?+
No. CAGR works with fractional years — for an investment held 3 years and 6 months, use 3.5 as the exponent's denominator.