CAGR (Compound Annual Growth Rate) Calculator

CAGR (Compound Annual Growth Rate) represents the annual geometric growth rate of an investment over multiple years, dampening the effect of annual volatility.

Initial amount invested or starting portfolio value.

Final value achieved at the end of the time period.

Number of years between beginning and ending dates.

How it works

Unlike simple absolute returns (which only tell you the total percentage gained over the whole period), CAGR reveals what steady annual compounding rate was required to turn the starting amount into the ending amount.

Formula

CAGR = ((Ending Value / Beginning Value) ^ (1 / t)) - 1

CAGR measures the smoothed annual rate of return that an investment would have grown by if it grew at a constant rate every year.

SymbolVariableUnitDescription
CAGRCompound annual growth rate%
Ending ValueFinal investment amount₹
Beginning ValueInitial investment amount₹
tTime periodyears

Worked example

₹1,00,000 growing to ₹2,50,000 over 5 years

Beginning Value:
₹1,00,000
Ending Value:
₹2,50,000
Period:
5 years

Ratio = 2,50,000 / 1,00,000 = 2.5. (2.5)^(1/5) - 1 = (2.5)^0.2 - 1 ≈ 1.2011 - 1 = 20.11% CAGR. Absolute gain is ₹1,50,000 (150%).

Limitations

CAGR assumes linear compounding and ignores intermediate annual volatility and drawdown risks.

Frequently asked questions

What is the difference between CAGR and Absolute Return?

Absolute return only measures total percentage gain regardless of time taken (e.g. 100% gain). CAGR tells you the annualized return per year (100% in 1 year is 100% CAGR, but 100% in 10 years is ~7.18% CAGR).

When should I use XIRR instead of CAGR?

Use CAGR for lump-sum investments with a single entry and single exit. For recurring cash flows like SIPs, periodic deposits, or multiple withdrawals, use XIRR (Extended Internal Rate of Return).

What is a good CAGR for equity mutual funds in India?

Historically, broad Indian equity indices (like Nifty 50 and BSE Sensex) have delivered around 12% to 14% CAGR over 10-15 year horizons.

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Last reviewed: 2026-08-22.