CAGR Calculator
Calculate the Compound Annual Growth Rate (CAGR) to measure the smoothed annual return of an investment over any time period. Compare funds, stocks, and investments objectively.
Investment Values
CAGR Result
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Compound Annual Growth Rate
💡 Formula
CAGR Formula
- CAGR = (Final Value / Initial Value)^(1/n) − 1, where n = number of years.
- CAGR shows the smoothed annual growth, eliminating the effects of year-to-year volatility.
- It assumes reinvestment of returns.
🎯 Use Cases
When to use CAGR
- Compare mutual fund performance across different periods
- Measure business revenue or profit growth
- Evaluate stock market returns
- Compare completely different investment types objectively
⚠️ Limitations
CAGR vs Reality
- CAGR hides volatility — it shows smoothed growth
- It doesn't reflect risk or drawdowns
- Same CAGR can result from wildly different paths
- Always check max drawdown & standard deviation too
Frequently Asked Questions
Is CAGR the same as average annual return?▾
No. CAGR is the geometric (compounded) mean, not the arithmetic average. Example: +100% then −50% gives 0% CAGR (₹100→₹200→₹100) but 25% simple average — which is misleading.
What is a good CAGR?▾
Depends on the asset class and time period. For Indian equity over 10+ years, 12–15% CAGR is considered good. For FDs, 6–7% is typical. A real (inflation-adjusted) CAGR of 7–8% is excellent.
Can CAGR be negative?▾
Yes. If your final value is less than the initial value, CAGR will be negative — it means your investment lost value on an annualized basis.
How do I calculate CAGR for SIPs?▾
CAGR isn't ideal for SIPs since money enters at different times. For SIPs, use XIRR (extended internal rate of return), which accounts for the timing of each cash flow.