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CAGR Calculator

Calculate Compound Annual Growth Rate to measure your investment performance over time.

Investment Details

₹
₹

Compound Annual Growth Rate

+14.87%

Your investment grew at an average rate of 14.87% per year.

Growth Summary

Beginning Value₹1.00 L
Ending Value₹2.00 L
Total Growth+₹1.00 L
Total Growth %+100.00%

Future Projections at 14.87% CAGR

If you invested ₹1.00 L at this CAGR:

After 5 Years

₹2.00 L

After 10 Years

₹4.00 L

After 20 Years

₹16.00 L

CAGR Formula

CAGR = (Ending Value / Beginning Value)^(1/n) - 1
  • CAGR: Compound Annual Growth Rate (as a decimal, multiply by 100 for percentage)
  • Ending Value: Final value of the investment (₹2.00 L)
  • Beginning Value: Initial value of the investment (₹1.00 L)
  • n: Number of years (5 years)

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Learn About CAGR

What is CAGR?

CAGR (Compound Annual Growth Rate) is a measure that represents the mean annual growth rate of an investment over a specified period longer than one year. It describes the rate at which an investment would have grown if it had grown at a steady rate on an annually compounded basis. CAGR smooths out the volatility of year-to-year returns to give a single growth rate that is easier to understand and compare.

Why is CAGR Important for Investors?

Compare Investments

Easily compare the performance of different investments over different time periods.

Smooth Out Volatility

CAGR provides a smoothed growth rate that ignores short-term market fluctuations.

Historical Analysis

Evaluate how well an investment has performed over its holding period.

Future Planning

Project future values based on historical growth rates for financial planning.

CAGR vs Simple Average Return

While simple average return adds up annual returns and divides by the number of years, CAGR accounts for compounding. This makes CAGR more accurate for understanding real investment growth.

Example: An investment that gains 100% in year 1 and loses 50% in year 2 has a simple average return of 25% ((100 - 50) / 2), but the actual ending value equals the starting value (no real gain). CAGR correctly shows 0% growth in this case.

Limitations of CAGR

  • 1

    Ignores volatility and risk - two investments with the same CAGR may have very different risk profiles.

  • 2

    Does not account for cash flows - additional investments or withdrawals are not factored in.

  • 3

    Past performance indicator - CAGR shows historical performance and cannot predict future returns.

  • 4

    Time period sensitivity - the chosen time period can significantly affect the calculated CAGR.