What is a CAGR Calculator?
CAGR (Compound Annual Growth Rate) is the steady yearly rate at which an investment would have had to grow to go from its starting value to its ending value over a period.
Use this calculator to compare investments held for different lengths of time on a like-for-like yearly basis.
How it helps you
- Turn any start and end value into a single yearly growth rate.
- Compare investments held for different periods fairly.
- See the difference between CAGR and the simple absolute return.
How it is calculated
CAGR = (Ending value ÷ Beginning value)^(1 ÷ n) − 1
- Ending value
- Value of the investment at the end
- Beginning value
- Value of the investment at the start
- n
- Number of years
An investment grew from ₹1,00,000 to ₹2,00,000 in 5 years.
- 1CAGR = (2,00,000 ÷ 1,00,000)^(1 ÷ 5) − 1
- 2= 2^0.2 − 1 = 1.1487 − 1
CAGR ≈ 14.87% a year, while the absolute return is 100%.
How to use the CAGR Calculator
- 1Enter the initial value and the final value.
- 2Enter how many years the investment was held.
- 3Read the CAGR, the absolute return and the gain.
Frequently asked questions
What is the difference between CAGR and absolute return?
Absolute return is the total percentage change, regardless of time. CAGR spreads that change into an equal yearly rate, so it is better for comparing investments held for different periods.
When should I use XIRR instead of CAGR?
CAGR works for a single investment. If you invested at different times (like a SIP) or withdrew money in between, XIRR gives a more accurate yearly return.
Does CAGR show volatility?
No. CAGR smooths the journey into one number; the actual year-by-year returns may have been very different.
Can CAGR be negative?
Yes. If the ending value is lower than the beginning value, CAGR is negative.