CAGR Calculator
Calculate the compound annual growth rate between two points in time. Free, privacy-first — inputs never leave your browser.
Details
Result
CAGR
24.57%
Absolute Return
200.00%
Gain
₹2,00,000
For estimation only. Not professional financial, tax, or legal advice. Consult a qualified advisor before making decisions. Full disclaimer.
What is CAGR?
CAGR (Compound Annual Growth Rate) is the annualised rate at which an investment would have grown if it compounded uniformly over time.
CAGR = (Final / Initial)^(1/years) − 1
Unlike simple average return, CAGR accounts for the fact that each year's gains build on the previous year's base. It's the standard for comparing long-term investment performance.
Common questions about CAGR
What is CAGR and why does it matter?+
CAGR (Compound Annual Growth Rate) is the smoothed annualised return between two points, assuming reinvestment. Formula: CAGR = (End/Start)^(1/years) − 1. Example: ₹1 lakh grows to ₹3.1 lakh over 10 years → CAGR = (3.1)^0.1 − 1 = 12%. It's the standard benchmark for comparing investments — annualised returns remove the distortion of holding-period length.
CAGR vs absolute return — what's the difference?+
Absolute return is total growth (% gain) over the full period. CAGR annualises it. A 50% absolute return over 5 years is only 8.45% CAGR; over 2 years it's 22.47% CAGR. Always ask for CAGR, not absolute return — mutual fund marketing often highlights absolute returns to look impressive. SEBI mandates CAGR disclosure for returns above 1 year.
Is CAGR the same as average annual return?+
No — CAGR is geometric mean; average is arithmetic. CAGR penalises volatility. Example: +100% year 1, −50% year 2. Arithmetic average = 25%; CAGR = 0% (you're back to start). CAGR reflects actual wealth change; average doesn't. Always use CAGR for multi-year investment evaluation.
What CAGR is realistic for Indian equity?+
Nifty 50 has delivered ~12.5% CAGR over the last 25 years (1999-2024). Actively managed large-cap funds: 10%-13%. Flexi-cap: 12%-14%. Mid-cap: 14%-16% with higher volatility. Small-cap: 15%-18% with extreme volatility. International equity (S&P 500): 10%-11% in INR. Debt funds: 6%-7.5%. Use conservative assumptions (10%-11% for equity) in goal planning.
How is CAGR used to compare mutual funds?+
Compare 5-year and 10-year CAGR against the benchmark index and category average. A fund beating benchmark by 1%-2% over 10 years is genuinely skilled. Beware: 1-year and 3-year CAGR can be distorted by market cycles. Also check rolling returns (e.g., 3-year CAGR starting every month) — more robust than trailing returns.
Does CAGR account for SIP or lumpsum?+
CAGR is defined for lumpsum (single investment, single withdrawal). For SIPs, use XIRR (Extended Internal Rate of Return) — it handles multiple cash flows at different dates. A SIP that shows 12% XIRR is equivalent to a lumpsum earning 12% CAGR. Most mutual fund apps display both; use XIRR when you've done SIP/SWP/partial redemptions.