CAGR Calculator
When two investments are held for different lengths of time, comparing their total returns is misleading — a 50% gain over two years is very different from 50% over five. The Compound Annual Growth Rate (CAGR) solves this by expressing growth as a single smoothed annual rate, as if the investment grew steadily every year. This CAGR calculator does it instantly: enter the starting value, the ending value, and the number of years, and it returns the annualised growth rate. CAGR is the standard yardstick for comparing mutual funds, stocks, business revenues, and real estate over time. Use it to judge whether an investment genuinely outperformed another, regardless of how long each was held.
CAGR
20.11%
Absolute Return
150.00%
Total Gain
₹1,50,000
About the CAGR Calculator
CAGR is the constant annual rate at which an investment would have grown to reach its final value from its initial value over a given period. It smooths out the year-to-year ups and downs into one comparable figure.
Why it is useful
Absolute returns ignore time, which makes them poor for comparison. CAGR puts every investment on a per-year basis, so you can fairly compare a fund held for three years against one held for seven, or benchmark your portfolio against an index.
How the calculation works
The formula is CAGR = (Ending value ÷ Beginning value)^(1 ÷ n) − 1, where n is the number of years. The calculator takes the ratio of final to initial value, takes its n-th root to annualise it, and subtracts one to express it as a percentage.
Key inputs explained
- Initial value: What the investment was worth at the start.
- Final value: What it is worth at the end.
- Number of years: The duration between the two values.
Example calculation
Inputs
- Initial value
- ₹1,00,000
- Final value
- ₹2,50,000
- Years
- 5
Calculation breakdown
- Ratio
- 2,50,000 ÷ 1,00,000 = 2.5
- n-th root
- 2.5^(1/5) ≈ 1.2011
- Subtract 1
- 1.2011 − 1 = 0.2011
The investment’s 150% total gain works out to about 20.1% compounded annually. That single number lets you compare it against any other investment regardless of its holding period.
Benefits
- Compares investments of different durations fairly.
- Smooths volatile returns into one clear figure.
- Widely used to benchmark funds, stocks, and businesses.
Limitations
- Hides volatility — two funds with the same CAGR can have very different risk.
- Assumes no withdrawals or additions during the period.
- For irregular cash flows, XIRR is more accurate than CAGR.
Tips
- Use CAGR to compare, but check volatility before deciding.
- For SIPs and irregular investments, prefer XIRR.
- Compare a fund’s CAGR against its benchmark index, not in isolation.
Explore related calculators
About this calculator
The CAGR Calculator is built and maintained by the PaisaBot team. All calculations run instantly in your browser using established financial formulas, and we use high-precision arithmetic to keep the results reliable.
Data accuracy: Interest rates, tax slabs, and scheme rules are updated periodically, but figures can change with RBI, government, and lender revisions. Always confirm the latest rates with your bank or an official source before acting.
Educational purpose: This tool is provided for general information and financial education only. It does not constitute investment, tax, or legal advice. For decisions specific to your situation, please consult a qualified financial advisor.