Free CAGR Calculator – Calculate Compound Annual Growth Rate

What Is CAGR and How the CAGR Calculator Works

Compound Annual Growth Rate is the single steady yearly rate that would have carried an investment from where it started to where it ended. Real returns bounce around — up 22 per cent one year, down 9 per cent the next — and CAGR flattens that noise into one comparable number. You supply three things: the starting value, the ending value, and how many years passed. Out comes a percentage that answers the question people actually ask about an investment: what did this earn me per year? Mutual-fund investors comparing two schemes, business owners reading revenue growth across five annual reports, property owners judging a flat bought a decade ago, and anyone who has been handed a glossy total-return figure and wants to see through it all use this. The formula is CAGR = (Final Value ÷ Initial Value)^(1 ÷ Years) − 1, then multiplied by 100 to read as a percentage. Three variables and nothing else: the initial value, the final value, and the number of years the money stayed invested. Taking the ratio of end to start gives total growth, and raising it to the power of one divided by the years asks what constant annual multiplier would produce that same total. The subtraction of 1 strips out the original capital so you are left with growth alone. Because the exponent is a fraction, longer holding periods pull the annual figure down for the same total gain, which is exactly the correction that makes cross-period comparison fair. Run the numbers on a real case. You put ₹1,00,000 into a fund and five years later the statement shows ₹2,00,000. The ratio is 2. Raise 2 to the power of 1 ÷ 5, which is 0.2, and you get 1.1487. Subtract 1 and multiply by 100: the CAGR is 14.87 per cent per year. Notice the doubling looks like a 100 per cent gain, and it is, but spread over five years it is not a 20 per cent annual return as a quick mental division would suggest — compounding means each year builds on the last, so the true annual figure is lower. That gap between 20 and 14.87 is where most people misjudge their own returns. The comparisons it enables are the point. An investor holding one fund for 3 years at 42 per cent total and another for 7 years at 92 per cent total cannot tell which performed better from those headlines; converting both to CAGR settles it in seconds. A small business owner whose revenue went from ₹40 lakh to ₹1.25 crore over seven years can tell a lender it grew at roughly 17.7 per cent a year, which is far more credible than a raw multiple. Someone weighing a fixed deposit at 7 per cent against an equity fund's historical record has a like-for-like basis for the trade-off. And a person who bought a flat for ₹35 lakh in 2014 and can sell at ₹62 lakh today can check whether the property genuinely beat a simple index fund over the same stretch. Two limitations deserve real attention. CAGR reads only the first and last data point, so it is blind to everything in between: a fund that fell 45 per cent in year two and clawed back can show the same CAGR as one that rose calmly throughout, despite completely different risk. Pair it with a volatility measure before drawing conclusions. The bigger practical mistake is applying CAGR to a monthly SIP — it assumes one lump sum with no additions or withdrawals, and since each SIP instalment is invested for a different length of time, you need XIRR or a dedicated SIP calculator instead. Also remember CAGR is history, not a forecast; a strong past record says nothing reliable about the next five years, and it excludes fees, exit loads, and tax. These figures are illustrative and informational, not financial advice — consult a SEBI-registered advisor before investing. Everything is computed in your browser and nothing you type is stored or uploaded.

CAGR Calculator Formula & Method

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