CAGR Calculator

Calculate the annualised return of any investment using CAGR.

📖 What is CAGR?

Compound Annual Growth Rate (CAGR) is the rate at which an investment would have grown if it grew at a steady rate annually over a specified period. It's one of the most important metrics in investing because it allows meaningful comparison between investments held for different time periods and with different volatility profiles.

CAGR is sometimes called the "smoothed" return - it doesn't show the ups and downs year-by-year, but rather the single consistent rate that would have produced the same result from start to finish. For example, a mutual fund might gain 30% in year one, lose 5% in year two, and gain 20% in year three. The simple average is 15%, but the CAGR is lower - around 14.2% - because it accounts for the compounding effect of losses.

CAGR is especially useful when comparing equity mutual funds, comparing your portfolio to index benchmarks like Nifty 50, evaluating business revenue growth, and planning for long-term financial goals. Fund fact sheets always report 1-year, 3-year, 5-year, and since-inception CAGR for this reason.

📐 Formula

CAGR = (Ending Value / Beginning Value)^(1/n) - 1

Ending Value = Beginning Value × (1 + CAGR)^n

Years = log(Ending Value / Beginning Value) / log(1 + CAGR)

Where n = number of years.

📖 How to Use This Calculator

Find CAGR: Enter beginning value, ending value, and years → get the annualised return.

Find End Value: Enter beginning value, target CAGR, and years → get the expected final amount.

Find Years: Enter beginning value, target ending value, and CAGR → get how long it takes.

💡 Example Calculations

Example 1 - Mutual Fund CAGR

You invested ₹1,00,000 in a mutual fund 7 years ago. It's now worth ₹2,50,000.

CAGR = (2,50,000 / 1,00,000)^(1/7) - 1 = 2.5^(0.1429) - 1 = 13.9% per year

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Example 2 - Planning a target corpus

You have ₹5,00,000 and want ₹20,00,000 in 10 years. What CAGR do you need?

CAGR = (20,00,000 / 5,00,000)^(1/10) - 1 = 4^0.1 - 1 = 14.87% per year

This requires a strong equity-oriented investment - achievable but not guaranteed.

Try this example →

Frequently Asked Questions

What is a good CAGR for investments?+

A CAGR above your local inflation rate means your money is growing in real terms. 6–10% is considered good for low-risk investments (bonds, fixed deposits), 10–15% for broad equity index funds, and 15%+ for aggressive growth portfolios. Compare against your local stock market index as a benchmark.

What is the difference between CAGR and absolute return?+

Absolute return is the total % gain without considering time. CAGR is the per-year equivalent of that return. A 60% absolute return over 4 years equals a CAGR of 12.5%, which is very different from a 60% return over 1 year.

How is CAGR different from average annual return?+

Average annual return is simply the arithmetic mean of yearly returns. CAGR is the geometric mean and accounts for compounding. CAGR is always equal to or lower than average annual return, and is considered more accurate for evaluating multi-year investment performance.

Can CAGR be negative?+

Yes, if the ending value is less than the beginning value. A negative CAGR indicates that the investment has lost value over the measured period.

What does CAGR mean for a mutual fund or ETF?+

Fund fact sheets show 1-year, 3-year, and 5-year CAGR. These are the annualised returns if you had invested at the start of each period. A 5-year CAGR of 14% means 100,000 units of currency invested 5 years ago would be worth 192,541 units today - regardless of which currency you used.

What is the CAGR formula?+

CAGR = (Ending Value / Beginning Value)^(1/n) - 1, where n is the number of years. For example, an investment that grew from ₹1,00,000 to ₹1,96,715 over 7 years: CAGR = (1,96,715 / 1,00,000)^(1/7) - 1 = 1.01^7 - 1 is incorrect - the correct calculation gives (1.96715)^(0.142857) - 1 ≈ 10% per year.

How do I use CAGR to compare two investments?+

Calculate the CAGR for each investment over the same time period, then compare. For example: Investment A grew from ₹50,000 to ₹1,05,000 in 6 years (CAGR = 13.2%). Investment B grew from ₹80,000 to ₹1,40,000 in 4 years (CAGR = 15%). Despite a smaller absolute gain, Investment B has the better annualised performance. Always use the same time period for fair CAGR comparisons.

Does a high CAGR guarantee future performance?+

No. CAGR is a historical measure - it tells you what an investment achieved in the past, not what it will do in the future. High historical CAGR can reflect a strong business or favourable market conditions that may not persist. Use CAGR as one input in your analysis alongside fundamentals, risk assessment, and current valuation.