CAGR Calculator
Calculate the Compound Annual Growth Rate (CAGR) between an initial and final value over a number of years.
Initial Value
₹
Final Value
₹
Number of Years
Yr
CAGR
20.11%
Total Growth
150.0%
Growth in Value
₹ 1,50,000
What is CAGR?
CAGR (Compound Annual Growth Rate) is the smoothed, year-over-year growth rate that would take an investment from its initial value to its final value over a given period, assuming it compounded steadily every year. It's the standard way to compare returns across investments with different holding periods, since it strips out the lumpy, real-world ups and downs into a single annualized number.
Formula
Example
An investment that grows from ₹1,00,000 to ₹2,50,000 over 5 years has a CAGR of about 20.1% — meaning it behaved, on average, as if it grew 20.1% every single year, even though actual year-to-year returns were almost certainly uneven.
Common Use Cases
- Comparing the annualized return of a mutual fund, stock, or business over several years.
- Standardizing returns across investments held for different lengths of time.
- Projecting a rough future value if you assume the same growth rate continues.
FAQs
Is CAGR the same as the actual annual return each year?
No — CAGR is a smoothed average. The actual value may have risen sharply one year and fallen the next; CAGR only tells you the equivalent steady rate that connects the start and end points, not what happened in between.
How is CAGR different from absolute (total) return?
Absolute return is the total percentage gain over the entire period, regardless of how long it took. CAGR annualizes that gain, which makes it possible to fairly compare, say, a 50% return over 3 years against a 50% return over 8 years — the shorter period has the higher CAGR.
Can CAGR be negative?
Yes — if the final value is lower than the initial value, CAGR comes out negative, representing the annualized rate of decline over the period.