CAGR Calculator

What is CAGR?

CAGR (Compound Annual Growth Rate) is the single steady yearly rate at which an investment would have grown from its starting value to its ending value, assuming every year's profit was reinvested and compounded. It answers the question that raw "total return" numbers hide: "what did I actually earn per year?" Because it standardises everything to one annual rate, CAGR lets you line up a 3-year stock trade, a 5-year mutual fund and a 10-year property deal on exactly the same scale.

The CAGR formula

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

Divide the final value by the initial value to get the growth multiple, raise it to the power of one-over-years, subtract one and multiply by 100 for a percentage. There are only three inputs — what you started with, what you ended with, and how long you held — which is exactly what the calculator above asks for.

Worked examples at a glance

The table below runs the same formula across a spread of realistic Indian scenarios, so you can see how the starting value, ending value and holding period combine into a single annual rate.

Why the same profit gives very different CAGRs

Total return on its own is misleading because it ignores time. Doubling your money is a 100% total return every single time — but the annual rate that produced it depends entirely on how long it took:

This is why CAGR is the fairer yardstick: doubling over 3 years (about 26% a year) is a completely different achievement from the same 100% gain stretched over 12 years (under 6% a year, barely ahead of a bank deposit). Whenever a fund advertisement or a stock tip quotes only a big total-return number, mentally divide it by the number of years to see how impressive the annual rate really is — a "200% return" over 15 years is a modest 7.6% CAGR.

CAGR vs absolute return vs XIRR

Three return measures get used almost interchangeably in India, yet each answers a different question — and picking the wrong one either flatters or understates your performance.

The rule of thumb: use absolute return for holdings under a year, CAGR for a single lump sum held longer, and XIRR the moment there is more than one cash flow. To project a one-time investment forward instead of measuring it backward, use our lumpsum calculator; for monthly investing, the SIP calculator handles the multiple instalments that CAGR cannot.

The Rule of 72 shortcut

You do not always need a calculator to sense-check a CAGR. The Rule of 72 estimates how long money takes to double — just divide 72 by the annual rate.

• At 12% CAGR, money doubles in roughly 72 ÷ 12 = 6 years.
• At 8% it takes about 9 years; at 6%, about 12 years.
• Run it backwards too — if a fund doubled in 8 years, its CAGR was about 72 ÷ 8 = 9%.

It is an approximation that works best for rates between roughly 6% and 20%, but it is close enough for mental math and pairs naturally with compound interest planning.

Benchmark CAGRs in India

A CAGR only means something next to a benchmark. These indicative long-run figures help you judge whether a return is genuinely strong or merely keeping pace with the crowd:

The real test is beating inflation. With retail inflation typically around 5–6%, a 7% FD delivers barely 1–2% of real growth, while long-run equity has historically stayed comfortably ahead. Use our inflation calculator to convert any nominal CAGR into what it is actually worth in today's rupees.

Limitations to keep in mind

• It assumes a single lump sum with no additions or withdrawals. For SIPs or staggered investments CAGR misstates the truth, so reach for XIRR instead.
• It smooths away volatility. A fund showing 14% CAGR may have swung from −30% to +40% in individual years; the single figure hides that ride entirely.
• It is backward-looking. A high past CAGR is history, not a promise — the standard caution that past performance may not be sustained applies.
• For periods under a year, annualising a short burst of return exaggerates it, so quote absolute return rather than CAGR.