CAGR Calculator
Compute Compound Annual Growth Rate between any two values over any duration.
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CAGR
Other measures
Compound Annual Growth Rate, or CAGR, is the constant yearly rate at which a value would have grown to reach its final amount, assuming returns were reinvested every year. CAGR smooths out the bumps of real world returns into a single number you can compare across investments.
Formula used
CAGR equals ((Final divided by Initial) raised to (1 divided by years)) minus 1, expressed as a percent. So a value that grows from ₹1,00,000 to ₹2,50,000 over 7 years has a CAGR of about 14.0 percent.
CAGR vs absolute return
Absolute return is the simple percent change between the start and end values. It does not account for time. CAGR converts the same change into an annualised number, which makes it easier to compare investments held for different durations. A 100 percent absolute return over 5 years is much better than the same return spread over 15 years.
Where CAGR matters
Mutual fund factsheets, stock investing portals, and PMS disclosures all report CAGR for periods of 1, 3, 5, and 10 years. Using CAGR keeps comparisons honest. The same logic applies if you want to compare the growth of a business, a salary, or an asset like real estate over years.
Frequently asked questions
No. CAGR is a smoothed annual rate, not the actual year on year return. A fund could deliver 30 percent in year one, lose 10 percent in year two, and still have a CAGR around 8 percent for the full period.
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