CAGR Calculator

CAGR turns "my ₹1 lakh became ₹2.5 lakh in 5 years" into a single yearly percentage you can compare with anything else. Enter the start value, the end value and the number of years.

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How to use this calculator

  1. Enter initial value — What the investment was worth at the start.
  2. Enter final value — What it is worth now.
  3. Enter period — Use decimals for part years — 1.5 means 18 months.
  4. Read the result — it updates as you type.

The formula used

CAGR = [ (Final ÷ Initial)1/t − 1 ] × 100

Final
Value at the end
Initial
Value at the start
t
Number of years (decimals allowed)

In words: divide the end value by the start value, take the t-th root, subtract one, and turn it into a percentage. The result is the single constant rate that would have produced the same outcome.

Worked example

An investment of ₹1,00,000 grew to ₹2,50,000 in 5 years.

  • Final ÷ Initial2,50,000 ÷ 1,00,000 = 2.5
  • 1 ÷ t1 ÷ 5 = 0.2
  1. 2.50.2 = 1.20112
  2. 1.20112 − 1 = 0.20112
  3. 0.20112 × 100 = 20.11%

The absolute return is 150%, but the CAGR is 20.11% a year — that is the number to compare against other investments.

What is CAGR, in plain language?

Imagine your investment grew by exactly the same percentage every single year and still ended at today's value. That percentage is the CAGR. It smooths out every good year and bad year into one honest average.

Why absolute return can mislead you

"I doubled my money" sounds impressive until you ask over how long. Doubling in 3 years is a CAGR of 26% — excellent. Doubling in 20 years is 3.5% a year — worse than a fixed deposit. Same absolute return, completely different investments.

When CAGR is the wrong tool

  • You added or withdrew money along the way. CAGR assumes one amount in at the start and one value at the end. For monthly investments use the SIP Calculator instead.
  • The period is under a year. Annualising two months of gains produces a headline number that will almost certainly not repeat.
  • You want to judge risk. Two funds can share a CAGR while one was calm and the other terrifying.

A sensible benchmark

Compare any CAGR against inflation first. A 7% CAGR when inflation ran at 6% is a real return of under 1%. The Inflation-Adjusted Return Calculator does that conversion.

Tips and common mistakes

Getting more out of it

  • Always quote CAGR alongside the period. "Up 150%" means nothing until you know it took five years.
  • Compare the result against inflation over the same years — that gap is your real gain.

Mistakes to avoid

  • Using CAGR for a SIP. It assumes one amount in and one value out; monthly investing needs XIRR instead.
  • Annualising a few months of gains. A 20% gain in two months annualises to a number that will not repeat.
  • Leaving dividends or payouts out of the final value, which understates the return you actually earned.

Frequently asked questions

What is a good CAGR?

It depends entirely on the asset and period. Historically, Indian equity indices have delivered roughly 11–13% over very long periods, fixed deposits 6–7%, and gold somewhere in between with long flat stretches. Anything far above those ranges deserves scepticism.

What is the difference between CAGR and absolute return?

Absolute return is total growth: (final − initial) ÷ initial. CAGR spreads that growth evenly across the years. Over exactly one year the two are identical; over longer periods CAGR is always the smaller-looking but more useful number.

Can CAGR be negative?

Yes. If the final value is lower than the initial value, the CAGR is negative — that is simply the average yearly rate of decline.

What is the difference between CAGR and XIRR?

CAGR handles one investment and one final value. XIRR handles many cash flows on different dates, which is what you need for a SIP or a portfolio you kept adding to.

Does CAGR include dividends?

Only if your final value includes them. If you received dividends in cash, add them to the final value before calculating, otherwise your return will look lower than it really was.

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Disclaimer: These calculators are for educational and informational purposes only. Results are estimates based on the inputs provided and should not be considered financial, investment, tax, or legal advice.