CAGR Calculator
Headline returns hide the path taken to reach them, and CAGR compresses an investment's growth into a single annualised percentage comparable across assets and time spans. This CAGR calculator derives that rate from a starting value, an ending value and the elapsed time, ignoring interim volatility along the way.
Enter values
Results
- CAGR
- 20.11%
- Total return over the period
- 150%
- Absolute gain
- ₹3,00,000.00
How is the CAGR calculated?
Enter what the investment was worth when you bought it, what it is worth at exit, and how many years elapsed between the two events. The calculator divides the final value by the initial one, raises that ratio to the power of one over the number of years and subtracts one to get the constant annual rate. The absolute return over the whole period and the absolute gain in rupees appear next to it, because the annualised figure and the rupee figure tell very different stories.
Formula
CAGR = (final ÷ initial)^(1 ÷ years) − 1 where initial is the value on day one, final the value at exit and years the holding period. A result of 20% means the investment behaved as though it grew by exactly 20% each year, whatever path it took in between.
Example
A fund bought for ₹2,00,000 is worth ₹5,00,000 five years later. The ratio is 2.5 and 2.5^(1 ÷ 5) − 1 = 0.2011, so the CAGR is 20.11% a year. Over the same stretch the absolute return is 150% and the gain is ₹3,00,000 — the annual figure looks restrained next to the rupee figure, which is exactly why this calculator shows both.
Things to remember
CAGR is most trustworthy when the holding period is long and the path between endpoints was reasonably smooth, because one annualised figure cannot show the drawdowns experienced in between. Use it to compare options on equal footing, and always state the time span alongside the rate so the comparison stays honest.
Frequently Asked Questions
What is a good CAGR for a mutual fund?
Over five years or more, 12–15% counts as strong for an Indian equity fund, 8–12% as steady, and anything below 6% as disappointing once inflation is deducted. Compare only with the fund's benchmark and category, because a short burst of 25% rarely repeats itself.
What is the difference between CAGR and absolute return?
Absolute return counts every rupee of change across the whole period — ₹2,00,000 becoming ₹5,00,000 is 150% — while CAGR spreads that growth across the years at 20.11% a year. Absolute figures grow with time, so they only compare fairly between investments held for identical periods.
Why is CAGR misleading over very short periods?
A brief window can contain one outsized move that the annualising formula stretches across every year of the result: a fund that rises 30% in six months reports a CAGR of 69%, a rate nobody should expect it to repeat. Short horizons also hide how far the value dipped before recovering.
Should I use CAGR or XIRR for my portfolio?
Use CAGR when there was a single purchase and a single exit with no additions or withdrawals in between. Once money moved on different dates — SIP instalments, top-ups, partial redemptions — XIRR over those dated flows delivers the accurate annualised answer instead.
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