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CAGR Calculator

Calculate Compound Annual Growth Rate to measure investment performance and compare asset returns over time.

Investment Details

About This Calculator

CAGR (Compound Annual Growth Rate) is the most important metric for measuring and comparing investment performance over time. Unlike simple annual returns, CAGR smooths out volatility to show a consistent growth rate as if the investment grew steadily each year.

How to Use This Calculator

  1. 1Enter your initial investment or starting value
  2. 2Enter the final value or current portfolio value
  3. 3Enter the number of years of the investment period
  4. 4Click Calculate to see your CAGR and total return

Formula Used

CAGR = (Final Value / Initial Value)^(1/Years) − 1

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FAQ

Frequently Asked Questions

Common questions about the cagr calculator answered.

What is a good CAGR for investments?+
A CAGR of 10 to 15 percent is generally considered excellent for equity investments over the long term. The S&P 500 has historically returned around 10 to 11 percent CAGR. Indian equity markets have delivered 12 to 15 percent CAGR over long periods. Fixed income investments typically return 5 to 8 percent CAGR.
How is CAGR different from average annual return?+
Average annual return simply averages yearly returns, which can be misleading. CAGR accounts for compounding and gives the actual rate at which an investment grew from start to end. For example, if an investment falls 50 percent then rises 100 percent, the average return is 25 percent but the CAGR is 0 percent since the portfolio is back to its starting value.
Can CAGR be negative?+
Yes. A negative CAGR means the investment lost value over the period. For example, if you invested 100,000 and it is worth 80,000 after 3 years, the CAGR is approximately minus 7 percent. This calculation still works correctly with our calculator.
How do I use CAGR to compare investments?+
CAGR is the best metric for comparing investments of different durations. If Stock A returned 150 percent over 10 years and Stock B returned 80 percent over 5 years, their CAGRs are approximately 9.6 percent and 12.5 percent respectively, making Stock B the better performer.
What is the difference between CAGR and IRR?+
CAGR measures growth between two single points in time. IRR (Internal Rate of Return) handles multiple cash flows at different times, making it more suitable for investments with periodic contributions or withdrawals. For a single lump-sum investment, CAGR and IRR give the same result.

CAGR Formula Explained

The CAGR formula is: CAGR = (Ending Value divided by Beginning Value) raised to the power of (1 divided by Number of Years), minus 1. This formula finds the single steady annual growth rate that would take you from the starting value to the ending value over the investment period. It is used by fund managers, analysts, and investors worldwide to benchmark performance.

  • Compare mutual fund performance across different periods
  • Evaluate stock portfolio growth objectively
  • Benchmark against market indices like S&P 500 or Nifty 50
  • Forecast future investment values at a target CAGR

CAGR vs Absolute Return

Absolute return tells you the total percentage gain or loss without considering time. CAGR tells you the annualised rate. A 100 percent absolute return over 10 years is only 7.2 percent CAGR, while the same 100 percent over 3 years is 26 percent CAGR. Always use CAGR when comparing investments of different durations.

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