CAGR Calculator (Compound Annual Growth Rate)
Accurately compute the smoothed annual rate of return for your investments over multiple years without being fooled by volatile point-to-point numbers.
What does this CAGR rate tell you?
Your investment grew from ₹1,00,000 to ₹2,50,000 over 5 years. This represents an annualized return (CAGR) of 20.11%, with an absolute return of 150%.
- Absolute return tells you the total percentage gain regardless of time. CAGR tells you the true per-year compound rate.
- A 100% gain over 10 years sounds massive, but its CAGR is actually ~7.18% (comparable to fixed income).
- CAGR is the golden metric used across institutional finance to compare mutual funds, stocks, and asset classes on an equal time-adjusted basis.
How This Calculator Works
CAGR calculates what constant annual rate of return would have been required for an investment to grow from its beginning balance to its ending balance over t years.
CAGR = (Final Value / Initial Value)^(1 / t) - 1Variables in Formula:
Worked Step-by-Step Example
You invested ₹1,00,000 in a flexi-cap mutual fund in 2019, and in 2024 (5 years later) the portfolio is worth ₹2,20,000.
Key takeaway: CAGR provides the true benchmark-beating annual velocity of your capital, removing distortion from the passage of time.
Common Mistakes to Avoid
⚠ Confusing Absolute Return with Annual Return
Saying 'I made 50% in mutual funds' without stating the time horizon is misleading. 50% over 1 year is exceptional; 50% over 7 years is a modest ~6% CAGR.
⚠ Using CAGR for irregular SIP cash flows
CAGR only works for single lumpsum point-to-point calculations. For ongoing monthly SIPs, use the XIRR Calculator instead.
Complementary Tools
Learn More on This Topic
"Calculator = calculate one thing. Financial Health Check = understand my overall situation."
Ready to see how your investments, debts, emergency fund, and cash flow fit together? Answer 5 simple questions to get your personalized financial blueprint.