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Calculates

CAGR Calculator

Calculate the annualised growth rate of an investment over time.

Calculated & verified for mathematical accuracy·Reviewed by the Calculates Editorial Team

Investment values

0 – 1,00,00,00,000

What the investment was worth on the day you bought it.

0 – 1,00,00,00,000

What it is worth today, including any dividends you received.

0 – 50

Use decimals for part-years — eighteen months is 1.5.

Compound annual growth rate

13.99%

₹1,00,000 grew to ₹2,50,000 over 7 years.

Absolute growth
₹1,50,000
Total return
150%
Growth multiple
2.5×
Beginning value
₹1,00,000

Why the annualised rate is lower

Dividing the 150% total return across 7 years suggests 21.43% a year. The true compounded rate is 13.99%, because each year builds on a balance that has already grown.

About this calculator

CAGR restates any investment result as the one steady yearly rate that would have carried the starting value to the ending value. Because it strips out the bumps along the way, two holdings bought at different times and held for different lengths become directly comparable. Enter what you put in, what it is worth now and how long you held it to see the annualised figure behind the headline gain.

How to use this calculator

  1. Enter the value you started with

    The amount actually invested on day one, before any fees you paid separately. If you bought in several tranches, this method will not fit — it assumes one purchase at one moment.

  2. Enter what the holding is worth now

    The current or exit value. Fold in any dividends, interest or bonus units you received, otherwise the rate will understate what the investment genuinely returned to you.

  3. Set the holding period

    Count the years between the two valuations, using decimals for part-years — eighteen months is 1.5. Getting this wrong distorts the answer more than a small error in either value does.

  4. Compare against the smoothed alternative

    The panel also shows total return divided by the number of years. That figure is always the flattering one; the distance between the two is the part of a quoted return that compounding accounts for.

Formula

CAGR = ((Ending value / Beginning value) ^ (1 / n) − 1) × 100
  • Beginning value is the amount committed at the start of the period and must be greater than zero, since nothing can grow out of nothing.
  • Ending value is what the holding is worth at the close of the period, including any income you reinvested into it.
  • n is the number of years between the two valuations and accepts fractions, so a 30-month holding is entered as 2.5.
  • The exponent 1/n takes the nth root of the total growth multiple, which is precisely the step that converts a cumulative gain into a per-year gain.
  • A result of exactly −100% means the holding went to zero; no input can ever produce a rate below that floor.
  • Where the start value or the period is zero the rate is undefined, so this calculator reports that plainly instead of substituting a misleading number.

Worked example

Inputs

  • Beginning value: ₹1,00,000
  • Ending value: ₹2,50,000
  • Holding period: 7 years

Calculation

Growth multiple = 250000 / 100000 = 2.5 Total return = (2.5 − 1) × 100 = 150% CAGR = (2.5 ^ (1 / 7) − 1) × 100 = (1.1398523 − 1) × 100 = 13.9852% Check: 100000 × 1.1398523 ^ 7 = 2,50,000 ✓ Naive yearly average = 150% / 7 = 21.43%

The holding grew at 13.99% a year. Dividing the 150% total gain by seven years would suggest 21.43%, an overstatement of nearly seven and a half percentage points, because that shortcut credits every year with growth on the original ₹1,00,000 rather than on the rising balance.

What the result means

  • The percentage is a smoothed, backward-looking rate. It is the constant speed that fits the two endpoints, not a claim that the holding rose by that amount in any particular year.
  • Absolute growth answers a different question from the rate. A ₹50,000 gain on ₹50,000 invested is a far better outcome than a ₹50,000 gain on ₹10,00,000, and only the percentage exposes that.
  • Total return is cumulative across the whole period, so it will always look larger than the annualised rate for any holding kept longer than a year. Quoting one when the reader expects the other is a common way returns get oversold.
  • A rate above your other options is only meaningful once risk is matched. An equity holding that annualised at 14% and a deposit that annualised at 7% are not two points on the same scale, because one of them could have ended lower than it started.

Related calculations

  • Fix the two values and stretch the holding period: the same rupee gain annualises to a steadily smaller rate the longer it took to earn.
  • Feed the resulting rate into the compound interest calculator as the annual rate to project the holding forward at the pace it has managed so far.
  • Work out the CAGR of each holding in a portfolio separately, then compare them on equal footing regardless of when each was bought.

Frequently asked questions

What counts as a good CAGR?

It depends entirely on what you compared against and what risk you carried. Broad Indian equity indices have annualised somewhere in the low teens over long stretches, so a diversified equity holding beating that has genuinely done well, while a bank deposit annualising at 7% may be exactly right for money you cannot afford to lose. Always judge a rate against a benchmark of similar risk over the identical period.

Why does CAGR come out lower than my total return divided by the years?

Because dividing by the number of years silently assumes every year earned its gain on the original sum, when in reality each year compounds on a balance that has already grown. Turning 1,00,000 into 2,00,000 over five years is 100% total, which the shortcut calls 20% a year, but only 14.87% compounded actually gets you there. The larger the gain and the longer the period, the wider that gap becomes.

Can CAGR be negative, and what does that mean?

Yes. Any holding worth less at the end than at the start annualises to a negative rate, which reads as the steady yearly decline that would have produced the same loss. Halving over two years works out to −29.29% a year. The floor is −100%, reached only when the holding becomes completely worthless, and no combination of inputs can take the figure below that.

Why can I not calculate CAGR from a starting value of zero?

The formula divides the ending value by the beginning value, and dividing by zero has no answer. Conceptually there is also no rate at which nothing becomes something — any growth from zero is infinite in proportional terms. If you began with no capital and added money over time, what you need is an XIRR or money-weighted return, which handles a stream of contributions.

Does CAGR tell me anything about how volatile the investment was?

No, and that is its main blind spot. A holding that rose smoothly by 12% every year and one that soared 60% then crashed 40% before recovering can annualise to the identical figure, because only the first and last valuations enter the calculation. Read the rate alongside a measure of spread such as standard deviation, or alongside the worst drawdown, before concluding two investments behaved alike.

How do I handle money I added or withdrew during the period?

This calculator cannot account for it, because the formula only accepts two valuations. Later contributions were exposed to the market for less time than the original sum, so treating the final balance as pure growth would flatter the result badly. Use XIRR, which weights each cash flow by how long it was invested, or use the SIP calculator when contributions are regular and equal.

Should dividends be included in the ending value?

Include them if you want the rate to reflect your actual total return. A stock paying a 3% yield that appears flat on price alone has still delivered real gains, and leaving the payouts out would report zero growth. Add the dividends you received to the ending value, or use the reinvested value if you ploughed them back, and note which convention you chose when comparing against a published index figure.

Is CAGR the same thing as annualised return or XIRR?

CAGR and annualised return mean the same thing when there is a single investment and a single exit. XIRR is different: it solves for the rate that discounts a whole series of dated cash flows back to zero, which is the correct approach for SIPs, staggered purchases and partial withdrawals. Where only two valuations exist, XIRR and CAGR converge on the same answer.

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