CAGR Calculator
Calculate Compound Annual Growth Rate (CAGR) of any investment. Enter initial value, final value, and years.
About the CAGR Calculator
CAGR (Compound Annual Growth Rate) is the single number that makes investment comparisons honest. It tells you the steady annual rate at which an investment would have grown from start to finish, assuming all gains were reinvested each year. A ₹1 lakh investment that grew to ₹2.5 lakh in 5 years has a 150% absolute return - but a CAGR of 20.1% p.a. That single number is directly comparable to any FD rate, mutual fund return, or benchmark index.
Critically, CAGR strips out the effect of holding period so you can compare a 3-year investment against a 12-year one. It is the industry-standard metric for mutual fund fact sheets, PMS performance reports, and stock analysis. When a fund manager says their fund has delivered '18% since inception', they mean 18% CAGR - not 18% per year as simple interest. Understanding this distinction prevents serious misreads of investment performance.
This calculator computes your CAGR and shows a year-wise projection of the investment growing at that rate. It also benchmarks your result against Nifty 50, PPF, FD, and inflation so you can instantly see whether the return beat the market, beat risk-free alternatives, and preserved real purchasing power.
Annualised Return
Converts any multi-year gain into a per-year rate, making investments of different durations directly comparable. Industry standard for mutual funds and equity performance.
Apples-to-applesBenchmark Comparison
Instantly see how your CAGR compares to Nifty 50, PPF, bank FD, and CPI inflation - answering the real question: did this investment beat the alternatives?
Year-wise Projection
See the growth curve and year-by-year value at the computed CAGR. Useful for understanding the compounding trajectory, not just the start and end points.
Works Both Ways
Enter any two of initial/final value and period to derive CAGR. Or use CAGR as a target rate to project what a given investment needs to reach your goal.
CAGR Formula
CAGR = (Final Value / Initial Value)^(1 / Years) - 1
Final Value = ending value of investment · Initial Value = starting value · Years = holding period (decimals allowed: 2.5 years is valid) · Result × 100 = CAGR as percentage · Negative CAGR when Final Value < Initial Value (capital loss) · CAGR assumes continuous reinvestment of all returns - does not account for intermediate cash flows (use XIRR for those)
Worked Example
Flat bought in Bengaluru in 2016 for ₹55 lakh, current market value ₹95 lakh in 2026 (10 years)
CAGR = (95/55)^(1/10) - 1 ≈ 5.6% · vs Nifty 50 same period: ~14% · vs CPI inflation same period: ~6% · The property barely beat inflation and significantly underperformed equity after ignoring maintenance costs and stamp duty
Tips & Insights
- 1
Nifty 50 has delivered approximately 12-14% CAGR over any rolling 10-year period since 2000. This is the baseline that any equity investment must beat to justify its risk over a passive index fund. If your stock picks or active fund shows 11% CAGR over 10 years, a simple Nifty index fund would have done better with lower cost and effort.
- 2
CAGR hides volatility completely. An investment that fell 60% in year 2 and then tripled in year 3 can show the same CAGR as one that grew steadily. Always check the investment's standard deviation or drawdown history alongside CAGR - especially for equity and real estate.
- 3
For investments with irregular cash flows - SIPs, PPF top-ups, partial withdrawals, rental income - CAGR gives the wrong answer. Use XIRR (Extended Internal Rate of Return) instead. Excel's XIRR function handles multiple cash flows with their actual dates and gives the true annualised return.
- 4
Inflation at ~6% is the invisible hurdle every investment must clear just to preserve purchasing power. An FD earning 6.5% has a real CAGR of only 0.5%. Real estate at 5.6% CAGR (as in the example) is actually losing real value. Any investment decision should be evaluated on real (inflation-adjusted) CAGR, not nominal.
- 5
Gold's CAGR in India over the last 20 years is approximately 11-12% in rupee terms, comparable to large-cap equity. But gold has zero yield (no dividends, no rent) and has storage costs. Its CAGR is purely from price appreciation. The equity equivalent would need to be a zero-dividend stock to make a fair comparison.
- 6
When evaluating a mutual fund's CAGR, always check the period. A fund showing '28% CAGR' might be measuring from the COVID low of March 2020 to today - a cherry-picked start date. Meaningful comparison requires same-period returns (e.g., 3-year, 5-year, 10-year rolling CAGR) or returns since inception for funds older than 10 years.
- 7
Reverse CAGR is useful for goal planning: if you need ₹1 crore in 10 years from ₹30 lakh today, what CAGR is required? Enter ₹30L as initial, ₹1Cr as final, 10 years - the result (12.8%) tells you the minimum investment performance your portfolio needs to achieve your goal.
- 8
Real estate CAGR calculations frequently overstate returns because they ignore: stamp duty (5-7% of purchase price), registration charges, brokerage (1-2%), annual property tax, maintenance costs, and periods of zero rental income. On a ₹55L flat with 7% acquisition costs, your effective initial value for CAGR purposes is ~₹59L, reducing the apparent CAGR by 0.3-0.5% per year.
Why this matters for you
Without CAGR, investment comparisons are deceptive. A friend who doubled their money in 3 years (CAGR 26%) is doing far better than another who tripled their money in 15 years (CAGR 7.6%). Absolute returns always look better when the holding period is longer - only CAGR allows a genuine comparison. Every financial advertisement that quotes 'X% returns' is implicitly quoting CAGR, and knowing how to verify and contextualise that number is foundational financial literacy.
The benchmark comparison is where CAGR becomes truly powerful. A 10% CAGR sounds impressive until you compare it to the Nifty 50's 14% over the same period - at which point 'good' becomes 'underperformed the market by 4% per year for a decade'. On ₹10 lakh invested for 10 years, that 4% annual gap compounds to a ₹9 lakh difference in final corpus. Context transforms a number into a decision.
For Indian investors specifically, the 6% inflation benchmark matters more than it is usually given credit for. India's long-run CPI inflation averages 5-7%. Any investment earning below that rate is destroying real wealth even as the nominal balance grows. Understanding real CAGR - the return above inflation - reframes the entire investment conversation: savings accounts at 3% have a real CAGR of -3%, FDs at 6.5% have a real CAGR of 0.5%, and equity at 13% has a real CAGR of ~7%.
Related Calculators
SIP Calculator
Calculate returns on your Systematic Investment Plan with year-by-year growth.
Compound Interest
Calculate how your money grows with daily, monthly, quarterly, or annual compounding. Includes monthly top-up, inflation adjustment, and year-wise breakdown.
Retirement Planner
Find out how much you need to save monthly to retire comfortably.
Frequently Asked Questions
What is CAGR and why is it used instead of absolute return?+
CAGR (Compound Annual Growth Rate) is the hypothetical steady annual rate at which an investment would have grown from its starting value to its ending value, assuming all returns were reinvested each year. It is used instead of absolute return because absolute return is misleading across different time periods: a 100% return over 2 years (CAGR 41%) is far better than 100% over 10 years (CAGR 7.2%). CAGR normalises for time, enabling direct comparison between any two investments regardless of when they started or how long they ran.
How is CAGR calculated?+
CAGR = (Final Value / Initial Value)^(1 / Years) - 1. Expressed as a percentage: multiply by 100. Example: ₹1,00,000 growing to ₹2,50,000 in 5 years gives CAGR = (2.5)^(0.2) - 1 = 0.2011 = 20.11% p.a. For partial years, use a decimal: 2.5 years is valid. For negative returns (final < initial), CAGR is negative. CAGR assumes a single lump-sum investment with no intermediate cash flows - for SIPs or partial withdrawals, use XIRR instead.
What is the difference between CAGR and XIRR?+
CAGR works only for a single initial investment and a single final value with no cash flows in between. XIRR (Extended Internal Rate of Return) handles multiple investments and withdrawals at irregular dates - making it the correct metric for SIPs, PPF (annual deposits), and any portfolio with ongoing contributions or withdrawals. Mutual fund SIP returns quoted in fact sheets use XIRR, not CAGR. If you calculate CAGR on a SIP investment, you will get a significantly wrong (lower) number because your later instalments had less time to compound.
What CAGR benchmarks should Indian investors use?+
Key reference points: CPI Inflation ~6% (real return floor - anything below destroys wealth), Bank FD ~6.5% (risk-free nominal benchmark), PPF 7.1% (tax-free guaranteed benchmark), Gold 10-12% (long-term historical in INR), Nifty 50 12-14% (large-cap equity 10-year rolling average), Mid/Small cap index 14-18% (higher return with higher volatility). For a diversified equity portfolio, 12% CAGR over 10+ years is a reasonable long-term expectation. Any equity product earning below the Nifty 50 CAGR has underperformed passive investing - the bar every active investment must clear.
Can CAGR be negative and what does it mean?+
Yes. A negative CAGR means the investment lost value over the period. If ₹1 lakh fell to ₹70,000 in 3 years, CAGR = (0.7)^(1/3) - 1 = -10.9% per year. This means the investment destroyed approximately 11% of its value each year on average. Negative CAGR over long periods (5+ years) is a serious red flag - very few asset classes sustain losses over decade-long periods. Individual stocks, sector funds, and poorly timed real estate purchases can produce negative long-term CAGR after accounting for inflation and holding costs.
How do I calculate CAGR for a real estate investment?+
Real estate CAGR is calculated the same way: CAGR = (Current Value / Purchase Price)^(1/Years) - 1. For a property bought at Rs. 40 lakh in 2014 and worth Rs. 90 lakh in 2024, CAGR = (90/40)^(1/10) - 1 = 2.25^0.1 - 1 = 8.44%. However, this headline CAGR is misleading without accounting for: stamp duty and registration paid at purchase (5 to 8% of value), annual property tax, maintenance charges (typically Rs. 5,000 to 20,000 per month in gated communities), home loan interest if the property was financed, and broker fees (1% each side) on sale. After all costs, a property that appears to have earned 8.44% nominal CAGR may deliver 5 to 6% true CAGR. Always compare the true CAGR (including all costs) against comparable alternatives like Nifty index funds or PPF before concluding real estate has outperformed.
What is absolute return versus CAGR and when should I use each?+
Absolute return = (Final Value - Initial Value) / Initial Value x 100. It measures total percentage gain regardless of time. CAGR normalises this gain to an annual equivalent. For the same investment, absolute return is always higher than CAGR over more than one year (since compounding adds to the absolute number). A 100% absolute return over 2 years is a 41.4% CAGR; over 10 years it is only 7.2% CAGR. Use absolute return for comparing strategies over the same fixed time period or for understanding the total gain on a closed investment. Use CAGR when comparing strategies across different time periods, when presenting returns to others, or when bench-marking against standard indices. Never use absolute return for time period comparison - a 200% return over 10 years (11.6% CAGR) is far less impressive than a 100% return over 3 years (26% CAGR).