Find the compound annual growth rate of any investment over time.
Interactive calculator loads below. JavaScript required for live calculations.
Formula
CAGR = ((Final Value / Initial Value)^(1/years)) − 1
The result is the geometric mean annual growth rate. Multiply by 100 to express as a percentage.
This assumes one-time initial investment with no further additions or withdrawals; for SIP-style investments use the SIP calculator instead.
Worked Examples
You invested ₹1,00,000 in a stock five years ago and it is now worth ₹1,76,234. CAGR = (1,76,234 / 1,00,000)^(1/5) − 1 = (1.76234)^0.2 − 1 = 1.1200 − 1 = 0.12 or 12%. Even though the stock returned 76% in absolute terms, the equivalent annual compounded return is 12%.
About the CAGR Calculator
CAGR, or Compounded Annual Growth Rate, is the single most important metric for evaluating investment performance in India. Whether you are looking at your stock portfolio, a piece of real estate, or the gold your family bought 10 years ago, the CAGR tells you the 'smoothed' annual return you earned. This CAGR calculator helps you cut through the noise of year-on-year volatility and find the real rate at which your wealth grew.
The CAGR Formula and Why It Matters
The formula for CAGR is: `[(End Value / Beginning Value) ^ (1 / Number of Years)] - 1`.
Unlike a simple average return, CAGR accounts for the fact that investment returns are compounded. If your ₹1 Lakh investment becomes ₹2 Lakh in 5 years, your total return is 100%, but your CAGR is 14.87%. It tells you that your money grew as if it were in a bank account paying 14.87% interest every year. This is the only way to fairly compare a stock's performance against a Fixed Deposit or a Public Provident Fund (PPF).
CAGR in the Context of Indian Real Estate
Real estate is a favorite investment in India, but people often exaggerate the returns. Someone might say, 'I bought this flat for ₹50 Lakh in 2010 and sold it for ₹1.2 Crore in 2024.' That sounds like a massive profit. But if you plug these numbers into our CAGR calculator, the return is roughly 6.45% per year—barely beating a long-term FD after considering maintenance and property tax. CAGR is the 'truth serum' for Indian property investments.
Stocks and Mutual Funds: CAGR vs Absolute Return
The Indian stock market (Nifty 50) has historically delivered a CAGR of 12-14% over the last 20 years. However, in any single year, it could be +30% or -20%. When a fund manager says the '3-year return is 15%', they are almost always referring to the CAGR. This allows you to compare different mutual funds accurately. If Fund A has a 5-year CAGR of 18% and Fund B has 15%, Fund A is clearly the better performer, even if Fund B had one exceptionally good year.
Limitations of CAGR
While CAGR is powerful, it has one major flaw: it assumes a 'smooth' growth. It ignores what happened in between. It also only works for 'Point-to-Point' investments (Lump sum). If you are doing a monthly SIP, CAGR is not the right metric—you should use XIRR (Extended Internal Rate of Return). For a simple 'I invested X and it became Y' scenario, CAGR is the gold standard.
How to Use This Calculator
1. Beginning Value: The amount you originally invested (purchase price + registration/brokerage).
2. Ending Value: The current market value or the price you sold it at.
3. Tenure: The number of years between the two dates.
Our calculator will provide the CAGR percentage instantly, helping you decide if your investment strategy is actually working or if you would be better off in a simple index fund.
Frequently Asked Questions
What does CAGR stand for?
CAGR stands for Compound Annual Growth Rate. It is the constant year-on-year growth rate that would have produced the same final value as the actual fluctuating returns.
Is CAGR the same as average annual return?
No. Average return is the arithmetic mean of yearly returns; CAGR is the geometric mean. Because of volatility drag, CAGR is always less than or equal to the arithmetic average.
Is CAGR appropriate for SIP returns?
No. CAGR assumes a single initial investment. For SIPs, use XIRR (Extended Internal Rate of Return) which handles multiple cash flows at different dates.
What is a good CAGR for stocks?
Long-term Indian equity index returns have averaged around 11-13% CAGR over 15-20 year periods. Individual stocks vary widely; anything consistently above 15% over 10+ years is exceptional.
Can CAGR be negative?
Yes. If the final value is less than the initial value, the CAGR formula returns a negative number, indicating an annualised loss.