CAGR Calculator
Compute the compound annual growth rate between an initial and a final value.
CAGR is the constant annual growth rate that would take the initial value to the final value over the given period.
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How it works
CAGR — compound annual growth rate — is the single steady yearly rate that would carry an investment from its starting value to its ending value over a given number of years. This calculator takes those three inputs and solves for the rate. The defaults show ₹1,00,000 growing to ₹2,00,000 over 5 years: a doubling, which works out to a CAGR of about 14.87% a year.
CAGR exists because absolute returns hide time. "The fund doubled" is a very different achievement over 5 years than over 15 — the first is a 14.87% CAGR, the second just 4.73%. By restating any growth as an equivalent annual compounding rate, CAGR puts investments of different ages on one scale, which is why mutual fund returns for periods of a year or more are quoted this way, on this site and everywhere else.
CAGR is a smoothed summary, not a history. A fund with a 15% five-year CAGR almost certainly never returned 15% in any single year — it may have gained 40% in one and lost 10% in another. It also assumes a single lump sum with no cash flows in between: for SIPs or investments with deposits and withdrawals on multiple dates, XIRR is the correct annualized measure.
CAGR = (FV ÷ PV)^(1/n) − 1PV is the starting value, FV the ending value, and n the period in years. The formula finds the constant rate that, compounded once a year for n years, turns PV into FV. Multiply by 100 for a percentage.
Frequently asked questions
What is CAGR and what does it tell you?
CAGR, the compound annual growth rate, is the constant yearly rate at which an investment would have had to compound to grow from its initial value to its final value over a period. ₹1,00,000 becoming ₹2,00,000 in 5 years is a CAGR of about 14.87%. It converts any multi-year outcome into an annual rate, making investments with different time horizons directly comparable.
What is the difference between CAGR and absolute return?
Absolute return is the total percentage change over the whole period — a doubling is a 100% absolute return whether it took 5 years or 15. CAGR divides that growth across time as a compounding annual rate: the 5-year doubling is a 14.87% CAGR, the 15-year one just 4.73%. Absolute return suits periods under a year; for a year or more, CAGR is the standard, and this site follows that convention.
What is the difference between CAGR and XIRR?
CAGR measures point-to-point growth of a single lump sum: one starting value, one ending value, one period. XIRR generalizes it to any pattern of dated cash flows — SIP instalments, top-ups, redemptions — finding the one annualized rate consistent with all of them. For a lump sum with no interim flows the two agree; for a SIP, only XIRR reflects that each instalment was invested for a different length of time.
Does a fund with a 12% CAGR return 12% every year?
No. CAGR is a smoothed average, not a record of yearly results. A fund showing a 12% CAGR over five years may have gained 35% in its best year and lost 15% in its worst; the CAGR only says the start-to-end outcome matches what a steady 12% would have produced. Rolling returns and volatility measures describe the bumpiness that a single CAGR figure deliberately hides.
Why is CAGR only used for periods of one year or more?
Annualizing a short period extrapolates it: a 5% gain over three months becomes a 21.6% "annual rate" only if that pace continues for a full year, which nothing guarantees. Quoting such a figure overstates what actually happened. The industry convention — followed by this site's fund metrics — is therefore to report absolute return for periods under one year and CAGR only from one year up.
Go further
Annualized return when there are multiple dated cash flows, like a SIP.
Absolute and annualized return side by side from the same three inputs.
The three return measures untangled, with worked examples.
The definition as used across this site's fund metrics.
Real funds that sustained a 15%+ CAGR over a full ten years.