CAGR Calculator
Calculate Compound Annual Growth Rate (CAGR) instantly. Find annual return between two investment values over time.
The CAGR Calculator helps investors calculate the Compound Annual Growth Rate of an investment over a specific period. CAGR represents the average annual growth rate of an investment assuming profits were reinvested each year.
It provides a clearer picture of investment performance compared to simple absolute returns, especially for long-term investments like stocks, mutual funds, or real estate.
What is CAGR?
CAGR stands for Compound Annual Growth Rate. It shows the annual growth rate of an investment over time, smoothing out volatility.
CAGR Formula
CAGR = (Final Value / Initial Value)1 / Years − 1
This formula calculates the constant annual return required to grow an investment from its starting value to its ending value.
Example
If you invested ₹1,00,000 and after 5 years it became ₹2,50,000:
- Absolute Return = 150%
- CAGR ≈ 20% per year
This means your investment grew at an average annual rate of 20% over 5 years.
Why CAGR is Important
- Compares different investments
- Measures long-term performance
- Removes yearly volatility impact
- Helps in financial planning
When to Use CAGR
- Stock investments
- Mutual fund returns
- Business growth analysis
- Portfolio comparison
Use this CAGR Calculator to evaluate investment performance accurately before making future financial decisions.
Frequently Asked Questions
What is CAGR?
CAGR stands for Compound Annual Growth Rate and represents the average annual return of an investment over time.
Is CAGR better than absolute return?
CAGR provides a more accurate picture of annual growth compared to simple absolute returns.
Can CAGR be negative?
Yes, if final value is lower than initial value, CAGR will be negative.
Does CAGR guarantee future returns?
No, CAGR represents past performance and does not guarantee future results.
Is CAGR used for mutual funds?
Yes, CAGR is commonly used to evaluate long-term mutual fund performance.