CAGR Calculator
Calculate the compound annual growth rate between any starting and ending value. Free CAGR calculator with absolute return and total gain breakdown.
CAGR, or Compound Annual Growth Rate, is the single number that tells you how an investment performed in annualised terms. Unlike absolute return, CAGR normalises the result so you can fairly compare a three year SIP to a fifteen year fund. The CAGR calculator on this page takes a starting value, an ending value and the number of years between them, and gives you the annualised rate, the absolute return and the total gain.
Inputs
Why use the CAGR Calculator
If you tell someone your investment doubled, they cannot judge whether that is good or bad without knowing how long it took. Doubling in 3 years is roughly 26 percent CAGR, which is excellent. Doubling in 12 years is roughly 6 percent CAGR, which is below most equity benchmarks. The CAGR calculator turns ambiguous return claims into comparable annual numbers, which is the unit serious investors and analysts use.
Benefits at a glance
Compare investments fairly
Run any pair of investments through the calculator and compare the CAGR figures directly. A 35 percent return in 5 years and a 90 percent return in 9 years come out to roughly the same 7 percent CAGR.
Audit fund and stock claims
Mutual fund factsheets and stock newsletters often quote impressive sounding absolute returns over multi year periods. Drop the start and end values into the calculator and see what the actual annualised number is.
Plan against benchmarks
If a Nifty 50 index fund has compounded at roughly 12 percent over the last 20 years, your active fund needs to clear that bar. The CAGR calculator makes it easy to verify in seconds.
Both CAGR and absolute return
The result shows the compound annual growth rate, the simple absolute return percentage and the total rupee gain. All three are useful in different contexts.
How to use the CAGR Calculator
- 1
Enter the initial value
The amount you started with. For a stock or a mutual fund, this is the cost basis at the time of purchase.
- 2
Enter the final value
What the investment is worth today, or at the date you are measuring against.
- 3
Enter the duration in years
Use fractional years if needed, for example 4.5 for four and a half years. The calculator accepts decimal values.
- 4
Read the CAGR
The CAGR is the annualised return that, compounded each year, would have grown the initial value to the final value. The absolute return is shown alongside for context.
Frequently asked questions
What is the CAGR formula?
CAGR equals (Final Value divided by Initial Value) raised to the power of (1 divided by years), then minus 1. Express the result as a percentage. For example, ₹100 growing to ₹250 in 5 years gives a CAGR of (250 over 100) raised to (1 over 5) minus 1, which equals 0.20 or 20 percent.
What is the difference between CAGR and absolute return?
Absolute return is the simple percentage change from start to finish, ignoring time. CAGR normalises the same change to an annualised rate. A 50 percent absolute return is impressive in 1 year and unimpressive in 10 years. CAGR exposes that distinction.
Is CAGR the same as IRR?
No. CAGR works only for a single starting investment and a single ending value. IRR (Internal Rate of Return) handles multiple cash flows in and out at different times, which is the right metric for SIPs and any investment with periodic contributions or withdrawals. For SIP returns, use the XIRR function in a spreadsheet, not CAGR.
What is a good CAGR for an Indian equity portfolio?
Long term Indian equity benchmarks (Nifty 50 and Sensex) have compounded at roughly 12 to 13 percent over rolling 15 year periods. Diversified mutual funds that beat the index have done 14 to 15 percent. A CAGR below 8 percent over a long horizon usually suggests poor stock or fund selection. A CAGR above 18 percent over a long horizon is exceptional and usually involves concentrated bets that may not repeat.
Can CAGR be negative?
Yes. If the final value is below the initial value, CAGR is negative. The calculator handles this case correctly. A negative CAGR means the investment has lost money in annualised terms.
Why does CAGR understate volatility?
Because it shows only the start and end values. An investment that went up 80 percent in year one and down 40 percent in year two ends with a 8 percent gain over two years, or roughly 3.9 percent CAGR. The CAGR makes it look stable when the path was wildly volatile. For volatility, look at standard deviation or the maximum drawdown of the investment.
How do I calculate CAGR for a mutual fund SIP?
You cannot use simple CAGR for an SIP because there are multiple investment dates. Use XIRR. Most fund houses publish XIRR for an SIP on their statements. In a spreadsheet, list the date and amount of every SIP installment as a negative number, the redemption date and amount as a positive number, and apply the XIRR function.
Final word
CAGR is the cleanest single number for comparing investments over different time horizons. Use the calculator before celebrating an absolute return number, before agreeing to a comparison in a sales pitch, and before judging your own portfolio against a benchmark. If the CAGR is below the index, the next question is whether the underperformance is worth the active management fee.
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