CAGR Calculator
Calculate the Compound Annual Growth Rate of any investment from its initial and final values.
CAGR
14.9%
Absolute Returns
₹1,00,000
Absolute Return %
100%
Growth Over Time
14.9%
| Year | Initial | Projected Value |
|---|---|---|
| 1 | ₹1,00,000 | ₹1,14,870 |
| 2 | ₹1,00,000 | ₹1,31,951 |
| 3 | ₹1,00,000 | ₹1,51,572 |
| 4 | ₹1,00,000 | ₹1,74,110 |
| 5 | ₹1,00,000 | ₹2,00,000 |
What is CAGR?
CAGR (Compound Annual Growth Rate) is the annualized rate of return that an investment would need to grow from its beginning value to its ending value, assuming profits are reinvested at the end of each year. It smooths out the volatility of year-to-year returns and gives you a single, clean number to evaluate investment performance.
CAGR vs Absolute Return
Absolute return tells you the total percentage gain — e.g., "my investment doubled, so 100% return." But it ignores time. CAGR factors in time: a 100% return over 3 years is a CAGR of 26%, while a 100% return over 10 years is a CAGR of only 7.2%. The formula is:
CAGR = (Final Value / Initial Value)^(1/n) - 1
where n is the number of years. CAGR is the standard way to compare investments of different durations.
When to Use CAGR
- Comparing mutual fund performance across different time periods
- Evaluating real estate appreciation over years
- Measuring business revenue growth
- Benchmarking portfolio returns against an index (e.g., Nifty 50 CAGR)
- Setting realistic expectations for future investment growth
FAQ: Is CAGR the same as average annual return?
No. Average annual return is the arithmetic mean of yearly returns, which can be misleading. For example, if an investment gains 50% in year 1 and loses 50% in year 2, the average annual return is 0%, but the CAGR is -13.4% (because ₹100 became ₹75). CAGR accounts for compounding and gives the true annualized return.
FAQ: What is a good CAGR for investments in India?
It depends on the asset class. Indian equity (Nifty 50) has historically delivered a CAGR of 11-14% over 10+ year periods. Gold has delivered 8-10% CAGR. Real estate varies by city but averages 6-8%. Fixed deposits offer 6-7%. Any equity investment consistently delivering 15%+ CAGR over 10 years is considered excellent.
FAQ: What are the limitations of CAGR?
CAGR assumes smooth, constant growth — it hides volatility. An investment with extreme ups and downs will show the same CAGR as one with steady growth, even though the risk profiles are very different. CAGR also does not work well for investments with intermittent cash flows (like SIPs) — for those, use XIRR instead. Try SIP Calculator →