CAGR Calculator
Calculate the Compound Annual Growth Rate of your investments. Understand true annualized returns and compare different investments fairly.
Measure Real Investment Performance
11.6%
Nifty 50 CAGR (20Y)
7.1%
PPF CAGR (Guaranteed)
6-7%
India Inflation Rate
12-15%
Good Equity MF CAGR
Calculate CAGR
Amount you invested initially
Current or final value of investment
Your Results
Compound Annual Growth Rate
11.61%
Your investment grew at this rate every year
Initial Investment
₹1,00,000
Final Value
₹3,11,000
Total Returns
₹2,11,000
Absolute Return
211%
How Your Investment Compares
What is CAGR (Compound Annual Growth Rate)?
CAGR stands for Compound Annual Growth Rate. It represents the mean annual growth rate of an investment over a specified time period longer than one year. CAGR smooths out the volatility of periodic returns to give you a single, consistent growth rate.
CAGR Formula
CAGR = (FV / PV)1/n - 1
- FV = Final Value (Ending Value of Investment)
- PV = Present Value (Beginning Value of Investment)
- n = Number of Years
- Result is expressed as a percentage
CAGR Example
If you invested ₹1,00,000 and it grew to ₹3,00,000 in 10 years: CAGR = (3,00,000/1,00,000)^(1/10) - 1 = 11.61%. This means your money grew at an average of 11.61% per year, compounded.
Why CAGR Matters
- Fair Comparison: Compare investments with different time periods on equal footing
- Smooths Volatility: Ignores yearly ups and downs to show overall growth
- Projection Tool: Estimate future value based on historical CAGR
- Benchmark Performance: Compare your portfolio against Nifty, FD, PPF
CAGR vs Absolute Return vs Average Return
| Metric | Formula | Best For | Limitation |
|---|---|---|---|
| Absolute Return | (Final - Initial) / Initial × 100 | Quick profit check | Ignores time period |
| Average Return | Sum of yearly returns / Years | Year-on-year analysis | Ignores compounding |
| CAGR | (FV/PV)^(1/n) - 1 | True annualized growth | Hides volatility |
| XIRR | IRR with specific dates | SIP/irregular investments | Complex calculation |
Important: CAGR is only valid for lumpsum investments with one entry and one exit. For SIPs or multiple investments at different times, use XIRR (Extended Internal Rate of Return) instead. CAGR will give incorrect results for SIPs.
Historical CAGR of Different Assets (India)
| Asset Class | 5-Year CAGR | 10-Year CAGR | 20-Year CAGR |
|---|---|---|---|
| Nifty 50 | 13.2% | 11.8% | 11.6% |
| Gold (India) | 12.5% | 10.8% | 11.2% |
| PPF | 7.1% | 7.5% | 8.0% |
| Bank FD (SBI) | 5.5% | 6.5% | 7.5% |
| Real Estate (Tier 1) | 3-5% | 6-8% | 8-10% |
| Inflation | 5.2% | 5.8% | 6.5% |
Real Returns Matter
Your real return = CAGR - Inflation. If your investment gives 10% CAGR and inflation is 6%, your real wealth growth is only 4%. This is why equity (12-15% CAGR) beats FD (6-7% CAGR) in long-term wealth creation.
CAGR Limitations
- Hides Volatility: A fund with 50% and -30% returns appears the same as steady 10% returns if CAGR is similar
- Ignores Cash Flows: Doesn't account for dividends, withdrawals, or additional investments
- Not for SIPs: Use XIRR for systematic investments with multiple cash flows
- Past ≠ Future: Historical CAGR doesn't guarantee future returns
Frequently Asked Questions
What is a good CAGR for mutual funds?
For equity mutual funds, 12-15% CAGR over 10+ years is considered excellent. Large-cap funds typically give 10-12%, while mid/small-cap funds may give 14-18% but with higher volatility. Any CAGR above Nifty 50 index (benchmark) indicates outperformance.
Can CAGR be negative?
Yes, if your ending value is less than the beginning value, CAGR will be negative. For example, if ₹1 lakh became ₹80,000 over 5 years, CAGR = (80,000/1,00,000)^(1/5) - 1 = -4.36%. This indicates your investment lost value.
How is CAGR different from IRR?
CAGR uses only two values (start and end) and assumes no intermediate cash flows. IRR (Internal Rate of Return) considers multiple cash flows at different times. XIRR is IRR with specific dates. Use CAGR for lumpsum, XIRR for SIP.
Why does my mutual fund app show different returns?
Mutual fund apps typically show XIRR for your portfolio (which accounts for all your SIPs and redemptions) and point-to-point returns for the fund itself. The fund's 10-year CAGR assumes lumpsum at day 1, while your returns depend on when you invested.