CAGR Calculator
Find out how much your investment has really grown each year. Enter the starting value, ending value and time period to get your true annual growth rate in seconds.
Year-wise Growth
| Year | Opening | Growth | Closing |
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What is CAGR?
CAGR (Compound Annual Growth Rate) is the single rate at which your money would have grown every year, on a compounded basis, if the growth had been perfectly smooth and steady. In reality, markets move up and down, but CAGR converts all those ups and downs into one clean annual number.
Put simply: if you invested ₹1 lakh and it became ₹2 lakh after 5 years, how much did you actually earn per year? CAGR is the correct answer to that question.
CAGR Formula
Example
You invested ₹1,00,000 in a mutual fund and its value grew to ₹2,00,000 after 5 years.
- Ending ÷ Beginning = 2,00,000 ÷ 1,00,000 = 2
- 21/5 = 1.1487
- 1.1487 − 1 = 0.1487 → CAGR = 14.87%
Notice that the absolute return is 100%, so many people assume they earned "20% per year". That's incorrect. Because of compounding, the actual annual growth rate is only 14.87%.
Average Return vs CAGR: A Common Trap
Suppose a ₹1,00,000 investment gains +50% in the first year and loses −50% in the second year.
- Simple average return = (50 − 50) ÷ 2 = 0%, which suggests no gain and no loss
- Reality: ₹1,00,000 → ₹1,50,000 → ₹75,000
- CAGR = (75,000 ÷ 1,00,000)1/2 − 1 = −13.4% per year
This is why you shouldn't be swayed by a fund's "average return". CAGR tells you what really happened to your money.
CAGR vs Absolute Return vs XIRR
| Metric | What it tells you | When to use it |
|---|---|---|
| Absolute Return | Total percentage gain, without considering time | Investments held for less than a year |
| CAGR | Smoothed, compounded annual growth rate | Lumpsum investments with one start value and one end value |
| XIRR | Annualised return on multiple cash flows made on different dates | SIPs, top-ups and partial withdrawals |
| Real CAGR | Growth in actual purchasing power after inflation | Long-term goals such as retirement or children's education |
Where is CAGR Used?
Compare funds or shares held over different time periods.
Put a 7% FD and a stock that doubled in 4 years on the same scale.
A flat bought for ₹40 lakh in 2015 and sold for ₹75 lakh in 2026 — what was the actual annual return?
Measure growth in revenue, profit or customers — a figure investors and lenders watch closely.
Need ₹1 crore in 15 years? Use the "Investment Needed for Goal" tab to see what to invest today.
Real (Inflation-Adjusted) CAGR
A 12% CAGR sounds impressive, but if inflation is 6%, your purchasing power is growing by only about 5.7% a year. The formula is:
Enter an inflation rate in the calculator and your real return will be shown automatically.
Limitations of CAGR
- It hides volatility: Crashes and rallies along the way don't show up in CAGR. Two funds can have the same CAGR but very different levels of risk.
- It only looks at the start and end points: If the end date falls just after a market crash, CAGR will look unfairly low, and vice versa.
- It isn't suitable for SIPs: When money is invested every month, CAGR is not the right measure. Use XIRR instead.
- It ignores taxes and charges: This calculator shows pre-tax figures. Your post-tax CAGR will be lower after capital gains tax, exit loads and expense ratios.
- Past performance isn't a guarantee: A fund with an 18% CAGR over the last 10 years won't necessarily repeat it over the next 10.
Rule of 72: Divide 72 by the CAGR to get a rough idea of how many years it will take your money to double. At 12% CAGR, 72 ÷ 12 = about 6 years. At 8%, about 9 years. The calculator also shows the exact doubling time.
Frequently Asked Questions
What is a good CAGR?
It depends on the asset class. Over the long term, FDs typically return close to inflation, debt funds slightly more, and diversified equity has historically delivered higher returns with higher risk. Most importantly, your CAGR should comfortably beat inflation and be enough to reach your financial goal.
Can CAGR be negative?
Yes. If the ending value is lower than the beginning value, CAGR will be negative, meaning the investment lost that percentage on average each year.
Can I use CAGR to calculate SIP returns?
No. In a SIP, each instalment is invested at a different time, so each has a different holding period. XIRR is the correct measure for SIPs. CAGR is accurate only for lumpsum (one-time) investments.
What is the difference between CAGR and annualised return?
For a lumpsum investment, they are practically the same — both represent a compounded annual rate. The difference arises when "annualised return" is calculated as a simple average, which can be misleading.
Are dividends included in CAGR?
Only if they are included in the ending value, such as reinvested dividends in a growth option or a total return index. If dividends were paid out and not added to the ending value, CAGR will understate your actual return.
Should I calculate CAGR for investments held less than a year?
It's better to look at absolute return for periods under a year. Annualising short periods can exaggerate returns significantly — a 10% gain in 3 months works out to roughly 46% when annualised.
Want to understand the tax impact of your investments?
CAGR tells you how much your money grew. We'll tell you how much of it you actually keep. Talk to The Finance Men for capital gains planning, ITR filing and financial advisory.
Talk to an ExpertDisclaimer: This calculator is for educational and illustrative purposes only. Results are pre-tax and do not guarantee future returns. Please consult a qualified advisor before making investment decisions.