CAGR Calculator

What is CAGR?

CAGR stands for Compound Annual Growth Rate. It is the single annualised rate at which an investment would have grown from its initial value to its final value, assuming profits are reinvested at the end of each year. Think of it as the "smoothed" growth rate that eliminates the noise of year-to-year fluctuations.

For example, if you invested ₹1,00,000 in a mutual fund and it grew to ₹2,50,000 over 8 years, the CAGR tells you the consistent annual rate that would produce that same result: approximately 12.13% per year. In reality, the fund may have gained 25% one year and lost 10% another, but CAGR gives you one clean number to compare against other investments.

CAGR is the most widely used metric by investors, financial analysts, and business leaders for measuring and comparing growth. Whether you are evaluating mutual fund returns, business revenue growth, real estate appreciation, or your own savings trajectory, CAGR is the standard yardstick.

How to Use This CAGR Calculator

This calculator has two modes — choose the one that fits your need:

Mode 1: Find CAGR

Use this when you know the starting value, ending value, and the time period, and want to find out the annualised growth rate.

1. Select Find CAGR tab (selected by default).
2. Enter the Initial Value — the amount at the start (e.g., your original investment of ₹1,00,000).
3. Enter the Final Value — the amount at the end of the period (e.g., current value ₹2,50,000).
4. Enter the Number of Years — the total holding period (e.g., 8 years). Decimals are accepted for partial years.
5. Click Calculate CAGR. Results appear instantly with a year-by-year growth table.

Mode 2: Future Value (Reverse CAGR)

Use this when you know the CAGR and want to project how much an investment will be worth after a certain number of years.

1. Select the Future Value tab.
2. Enter the Initial Investment — your starting capital.
3. Enter the Expected CAGR % — the annualised growth rate you are targeting or expecting.
4. Enter the Number of Years.
5. Click Calculate CAGR to see the projected final value and year-by-year progression.

CAGR Formula Explained

The CAGR formula is straightforward once you understand its components:

Where:

• Final Value: The value of the investment at the end of the period.
• Initial Value: The value of the investment at the beginning.
• n: The number of years in the investment period.
• CAGR: The compound annual growth rate expressed as a decimal (e.g., 0.12 for 12%).

The exponent 1/n is the mathematical operation that "annualises" the total growth. It takes the total multiplier (Final/Initial) and finds the equivalent per-year multiplier when compounded n times. This is the n-th root of the total return ratio.

For example: ₹1,00,000 growing to ₹2,11,000 in 6 years gives CAGR = (2,11,000 / 1,00,000)^(1/6) − 1 = 2.11^0.1667 − 1 = 1.1318 − 1 = 13.18%.

Example Calculations

CAGR vs Absolute Return

These two metrics are both measures of investment growth, but they answer different questions:

• Absolute Return measures total growth as a percentage, regardless of time. If ₹1 lakh becomes ₹2 lakh, the absolute return is 100%. Simple but misleading when comparing investments held for different durations.
• CAGR annualises that growth. The same doubling over 3 years = 26% CAGR. Over 7 years = 10.4% CAGR. Over 15 years = 4.7% CAGR. It lets you compare a 3-year investment against a 10-year investment on equal footing.

When to use absolute return: For very short-term investments (under 1 year) where annualising does not make practical sense.

When to use CAGR: For any investment held for 1 year or more — mutual funds, stocks, real estate, FDs, business metrics, or savings goals. Always use CAGR when comparing two investments held for different durations.

This calculator shows both figures for every calculation, so you can report whichever is appropriate for your context.

CAGR Benchmarks by Asset Class

Use these typical CAGR ranges to evaluate your investment performance:

• Savings Account: 2.7–4% CAGR — lowest risk, lowest return. Good for emergency funds, not for wealth creation.
• Fixed Deposits (FD): 6–7.5% CAGR — safe and predictable. Returns are taxable as per income slab.
• Public Provident Fund (PPF): ~7.1% CAGR — tax-free, government-backed, 15-year lock-in.
• Debt Mutual Funds: 6–9% CAGR — moderate risk, better tax treatment than FDs for higher slabs.
• Nifty 50 Index (historical): 12–14% CAGR over 10+ year periods — passive equity with broad market exposure.
• Large-cap Equity Funds: 12–16% CAGR over 5–10 years — actively managed, higher volatility than index funds.
• Mid/Small-cap Equity Funds: 14–22% CAGR over long periods — highest equity returns, highest short-term volatility.
• Real Estate: 7–12% CAGR in most Indian cities over long holding periods — excludes rental income and maintenance costs.
• Gold: 8–11% CAGR over 10-year rolling periods in India — effective inflation hedge but generates no income.

These are historical averages. Past performance does not guarantee future results. Use CAGR as a planning tool, not a prediction.

Calculator Category

This tool belongs to Finance Calculators. Browse similar tools for related calculations.