CAGR Calculator
Calculate CAGR (Compound Annual Growth Rate) instantly with our free online CAGR Calculator. CAGR shows the average yearly growth of your investment over time — perfect for comparing mutual funds, stocks, FDs, and business revenue growth in India.
Calculate CAGR (Annual Growth Rate)
CAGR Calculation Results
Formula Used
CAGR \(=\) \((\text{Ending Value} \div \text{Beginning Value})^{(1/\text{Years})} - 1\)
Use CAGR to compare investments with different time periods — it removes the “noise” and gives a single annualized growth number.
What is CAGR and Why It Matters
CAGR (Compound Annual Growth Rate) tells you the average annual growth rate of an investment over a period of time, assuming the investment grows at a steady rate every year. In real life, returns fluctuate — but CAGR is still one of the best “apples-to-apples” metrics to compare performance.
CAGR Formula
CAGR = (Ending Value / Beginning Value)1/Years - 1
- Beginning Value: Starting investment value
- Ending Value: Final investment value
- Years: Total time period (in years)
Where CAGR is Used (India)
- Mutual funds: Compare fund performance across 3Y/5Y/10Y periods
- Stocks: Track portfolio growth over time
- Business: Measure revenue/profit growth year-on-year
- Personal finance: Compare CAGR vs FD/RD returns and inflation
Important Note
CAGR assumes one-time investment. If you invest monthly (like SIP), use a SIP calculator or XIRR for more accurate returns.
CAGR Calculation Example
Example: If ₹1,00,000 becomes ₹1,80,000 in 5 years, what is the CAGR?
- Beginning Value: ₹1,00,000
- Ending Value: ₹1,80,000
- Time: 5 years
CAGR \(=\) (1.8)1/5 − 1 \(=\) 12.47% per year (approx.)
This means your money grew at an average of ~12.47% each year over the 5-year period.
Quick Answers
What is CAGR?
CAGR (Compound Annual Growth Rate) is the average yearly growth rate of an investment over a period, assuming growth is compounded. It smooths out volatility.
How is CAGR calculated?
CAGR = (Ending value ÷ Beginning value)^(1 ÷ years) − 1. It converts total return into an equivalent annual rate.
What is CAGR used for?
CAGR is used to compare investments over the same period (e.g. mutual funds, stocks, FDs) or to express business revenue growth in a single rate.
Is CAGR the same as actual yearly return?
No. CAGR is an average; actual returns can vary each year. CAGR does not show year-by-year performance.
Can CAGR be negative?
Yes. If the ending value is lower than the beginning value, CAGR is negative, indicating an average yearly loss.
Frequently Asked Questions
Is CAGR the same as annual return?
No. CAGR is an annualized return assuming smooth growth, while actual annual returns can vary every year. CAGR is mainly used to compare performance across different periods.
Can CAGR be negative?
Yes. If your ending value is lower than your beginning value, CAGR becomes negative, indicating an average yearly loss.
Should I use CAGR for SIP returns?
No. CAGR assumes a lump-sum investment. For SIP, use the SIP Calculator or XIRR, since you invest at different times.
What is a good CAGR in India?
It depends on the asset class and risk. FDs often offer lower stable returns, while equity investments can have higher but volatile returns. Always compare CAGR with inflation and your risk profile.
What is the difference between CAGR and XIRR?
CAGR is best for a one-time (lump-sum) investment with a single beginning and ending value. XIRR is used when you have multiple cash flows on different dates (like SIP, irregular investments, or partial withdrawals). For SIP and portfolios with multiple transactions, XIRR is usually more accurate than CAGR.
How do I calculate CAGR in Excel?
You can calculate CAGR in Excel using: =(Ending/Beginning)^(1/Years)-1. Then format the cell as percentage. Example: =(B2/A2)^(1/C2)-1 where A2 is beginning value, B2 is ending value, and C2 is years.