CAGR

CAGR is the smooth annualised rate at which a single lump-sum investment would have grown if it had compounded at a constant pace from start to end. It strips out the year-to-year volatility and gives you one clean number you can compare across mutual funds, stocks, gold, real estate, or an entire asset class. When a fund factsheet says "5-year CAGR 14.2%", that is the figure it means.

The formula is (Final Value / Initial Value)^(1 / Years) − 1. Turn ₹1,00,000 into ₹2,00,000 over 7 years and the CAGR is (2)^(1/7) − 1 ≈ 10.4%. Note that CAGR only works for a single inflow and a single outflow — it cannot handle SIPs, top-ups, or partial withdrawals. For those cashflow-stream situations, XIRR is the correct metric.

CAGR is not a guarantee: a 12% CAGR over a decade can hide a −40% year and a +60% year. Regulators in India require mutual funds to disclose CAGR only for periods of one year or longer, and to use absolute returns for shorter periods.

Open our CAGR calculator to enter a start value, end value, and holding period, and see both CAGR and the equivalent lump-sum growth curve.