CAGR Calculator
Find the steady yearly growth rate of an investment from what you started with, what it is worth now, and how long you held it.
CAGR describes past growth as if it were smooth. Real investments rise and fall along the way, and past growth does not tell you future returns.
How this is calculated
CAGR = (ending value ÷ starting value)^(1 ÷ years) − 1. Absolute return = (ending value − starting value) ÷ starting value. CAGR is the fairer way to compare investments held for different lengths of time.
A worked example
- 1 lakh rupees grows to 1.8 lakh in 5 years: an 80% absolute return, but a CAGR of about 12.47% a year.
- 50,000 rupees doubles to 1 lakh in 3 years: a 100% absolute return, and a CAGR of about 26% a year.
For money added in instalments, like a SIP, use XIRR instead. To project growth forward at a rate, use the compound interest calculator.
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Questions people ask
What is CAGR?
CAGR, the compound annual growth rate, is the steady yearly rate at which an investment would have grown from its starting value to its ending value. It smooths out the ups and downs into one yearly number, so you can compare investments held for different lengths of time.
How do you calculate CAGR?
CAGR = (ending value ÷ starting value)^(1 ÷ years) − 1. In the illustration on this page, 1 lakh rupees growing to 1.8 lakh in 5 years is a CAGR of about 12.47% a year, even though the total gain is 80%.
What is the difference between absolute return and CAGR?
Absolute return is the total gain over the whole period, ignoring how long it took. CAGR spreads that gain over the years. An 80% gain sounds big, but over 5 years it is about 12.5% a year, and over 10 years only about 6% a year.
Should I use CAGR for a SIP?
Not directly. CAGR assumes one investment at the start. A SIP puts money in every month, so each instalment is invested for a different time. For a SIP, the right measure is XIRR, which accounts for every date you invested.