Investment Growth Tool
CAGR Calculator
Calculate Compound Annual Growth Rate (CAGR) for investments, stocks, mutual funds, and business growth.
Investment Details
Compound Annual Growth Rate
37.97%
Disclaimer: CAGR calculations are based on the inputs provided and are for illustrative purposes only. Past performance does not guarantee future returns. Actual investment returns may vary.
CAGR does not account for volatility or risk. Please consult a financial advisor for personalised investment advice.
What Is CAGR?
CAGR (Compound Annual Growth Rate) measures the average annual growth rate of an investment over a specific time period. It helps investors understand long-term investment performance more accurately than simple returns, smoothing out volatility and providing a clear annualised figure.
CAGR answers one specific question: "what constant annual return, compounded every year, would have produced this same total result?" It's a smoothing tool, not a description of the actual ride — two investments can have identical CAGR over five years while one swung wildly year to year and the other grew steadily, so CAGR alone doesn't tell you anything about volatility or risk along the way.
How Is CAGR Calculated?
CAGR uses this formula:
CAGR = [(Final Value / Initial Value)^(1/N) − 1] × 100
Here N is the number of years between the two values. An investment that grew from ₹1,00,000 to ₹2,00,000 over 6 years has a CAGR of about 12.2% — even though the actual year-by-year path could have included both sharp gains and losing years along the way. Always check what start and end dates a CAGR figure uses before comparing it across sources — a CAGR measured from a market bottom to a peak will look far better than the same period measured peak-to-peak.
Benefits Of CAGR Analysis
Compare Investments
CAGR helps compare investment performance across stocks, mutual funds, businesses, and assets on a consistent annualised basis.
Long-Term Analysis
Investors can evaluate long-term wealth growth more effectively using annualized returns rather than absolute returns.
Goal Setting
CAGR helps set realistic return expectations and plan future investment goals.
Performance Tracking
Track investment performance over multiple years to assess strategy effectiveness.
Frequently Asked Questions
What is a good CAGR?
A good CAGR depends on asset type, market conditions, and investment risk levels. A good CAGR depends on the investment type, market conditions, and level of risk. Historically, stock markets have delivered strong long-term returns, while fixed-income investments generally provide lower but more stable returns.
Why is CAGR important?
CAGR provides a smoothed annual growth rate that removes volatility, making it easier to compare investments with different time horizons and evaluate long-term performance.
What is the difference between CAGR and absolute return?
Absolute return measures total growth over the entire period, while CAGR expresses it as an annualised rate, making comparisons across different timeframes more meaningful.
Does CAGR account for volatility or risk?
No. CAGR only looks at the start and end values, so it can't tell you how bumpy the path was. Two investments with the same CAGR can have very different volatility — pair it with standard deviation or a year-by-year return chart for the full picture.
Can CAGR be negative?
Yes — if the final value is lower than the initial value, CAGR comes out negative, reflecting an average annual loss over the period rather than growth.