CAGR Calculator — Compound Annual Growth Rate for Any Investment

CAGR Calculator — Find the Annualised Growth Rate of Any Investment

What is CAGR?

CAGR — Compound Annual Growth Rate — is the single most widely used metric to express the annualised performance of an investment. It answers the question: if my investment grew at a constant rate each year, what would that rate be?

The formula:

CAGR = (End Value / Start Value)^(1/n) − 1

where n is the number of years between the start and end values.

CAGR is equivalent to Excel’s RRI(nper, pv, fv) function and is the standard metric used by mutual funds in India under SEBI’s point-to-point return disclosure norms.

CAGR vs absolute return vs XIRR

Metric	Formula	When to use
Absolute return	(End − Start) / Start	One-shot comparison, no time weighting
CAGR	(End/Start)^(1/n) − 1	Single lumpsum, single exit — normalises for time
XIRR	Newton-Raphson NPV=0	Multiple cashflows at irregular dates (SIPs, top-ups, partial exits)

Key insight: a 100% absolute return over 1 year means a CAGR of 100%. The same 100% return over 10 years means a CAGR of only ~7.2%. CAGR makes these comparable; absolute return does not.

Why CAGR can mislead on volatile assets

CAGR assumes straight-line compounding. Consider an asset that returns +100% in year 1 and −50% in year 2: starting at ₹1L, it becomes ₹2L then ₹1L — exactly where it started, giving a CAGR of 0%. Yet an investor who entered at the ₹2L peak lost 50%.

For volatile assets (small-cap funds, stocks, crypto), always look at:

CAGR over the full period
Maximum drawdown (peak-to-trough loss)
Rolling returns (1yr, 3yr, 5yr) to understand consistency

Real CAGR: adjusting for inflation

Nominal CAGR does not account for rising prices. If your fund delivered a 12% CAGR but inflation was 6%, your real CAGR is:

(1 + 0.12) / (1 + 0.06) − 1 ≈ 5.66%

India’s average retail inflation (CPI) has been around 5–6% over the past decade. A nominal CAGR of 8% in a debt fund barely keeps pace; equity funds historically delivering 12–14% CAGR have provided meaningful real returns over long horizons.

Worked examples

Example 1 — Mutual fund lumpsum

₹1,00,000 invested in an equity fund; redeemed at ₹2,00,000 after 7 years.

CAGR = (2,00,000 / 1,00,000)^(1/7) − 1 ≈ 10.41%
Absolute return = ₹1,00,000 (100%)

Example 2 — Stock portfolio

Portfolio value grew from ₹3,00,000 to ₹9,00,000 over 10 years.

CAGR = (9,00,000 / 3,00,000)^(1/10) − 1 ≈ 11.61%
Absolute return = ₹6,00,000 (200%)

Example 3 — Fixed deposit (for comparison)

₹1,00,000 FD matured to ₹1,79,586 after 10 years.

CAGR ≈ 6.00% — exactly the stated interest rate (as expected for a compounding FD)

Bridges

XIRR calculator — for SIP returns or multiple cashflows where CAGR is not applicable
Lumpsum calculator — project how a lumpsum grows forward using an assumed CAGR
Mutual fund returns calculator — compute returns from NAV-based investments with expense ratio drag

Frequently Asked Questions

What is CAGR and how is it calculated?

CAGR (Compound Annual Growth Rate) is the rate at which an investment would have grown if it grew at a steady rate annually. Formula: CAGR = (End Value / Start Value)^(1/n) − 1, where n is the number of years. For example, ₹1L growing to ₹2L over 7 years gives CAGR = (2,00,000/1,00,000)^(1/7) − 1 ≈ 10.4%. This is the same formula as Excel's RRI function and Google Sheets' equivalent.

What is the difference between CAGR and absolute return?

Absolute return measures total percentage gain without considering time: (End Value − Start Value) / Start Value × 100. A 100% absolute return could be achieved in 1 year (CAGR 100%) or in 10 years (CAGR ~7.2%) — very different outcomes. CAGR normalises for time, making it the right metric for comparing investments held over different periods.

When should I use CAGR vs XIRR?

Use CAGR when: you made a single lumpsum investment and want the annualised return on a point-to-point basis. Use XIRR when: you made multiple investments at different dates (e.g., SIP instalments), made partial withdrawals, or reinvested dividends. XIRR is the generalised version — for a single buy and single sell, XIRR and CAGR give identical results. See our [XIRR calculator](/investments/xirr-calculator/) for irregular cashflows.

Why can CAGR be misleading for volatile assets?

CAGR assumes smooth compounding — it ignores the path of returns. An asset that went +100% in year 1 and −50% in year 2 has a CAGR of 0%, yet many investors would have experienced significant losses depending on when they entered. For volatile assets, standard deviation and drawdown metrics supplement CAGR. CAGR is best interpreted as a long-term smoothed growth rate, not a promise of year-by-year performance.

What is the difference between real CAGR and nominal CAGR?

Nominal CAGR uses actual rupee values without adjusting for inflation. Real CAGR adjusts for inflation: Real CAGR = ((1 + Nominal CAGR) / (1 + Inflation Rate)) − 1. For example, a nominal CAGR of 12% with 6% inflation gives a real CAGR ≈ 5.7%. Use real CAGR to assess whether your investment is genuinely growing your purchasing power.

Does this calculator match Excel's RRI function?

Yes. Excel's RRI(nper, pv, fv) function computes the same formula: (fv/pv)^(1/nper) − 1. Enter RRI(7, 100000, 200000) in Excel and you get the same result as this calculator. Google Sheets' RRI function is identical.

Compliance disclaimer

Mutual fund investments are subject to market risks. Read all scheme related documents carefully before investing. Past performance is not indicative of future returns. The information on this page is for educational purposes only and does not constitute investment advice. Distribution by Jayesh Jain (AMFI ARN-286359). No advisory fees are charged.