CAGR Calculator
Measure your investment growth accurately. Calculate the Compound Annual Growth Rate instantly.
Compound Annual Growth Rate (CAGR)
Absolute Return
Growth Trajectory
Understanding CAGR (Compound Annual Growth Rate)
CAGR is a business and investing specific term for the geometric progression ratio that provides a constant rate of return over the time period. It is not an accounting term, but it is often used to describe some element of the business, for example revenue, units delivered, registered users, etc.
Smoothed Returns
CAGR dampens the effect of volatility of periodic returns that can render arithmetic means irrelevant. It is particularly useful to compare the growth rates of various data sets.
Performance Comparison
It is the best metric to compare the performance of two different investments held for different periods of time.
The Formula
Where n is the number of years.
How to Calculate CAGR: A Step-by-Step Example
Let's say you invested ₹1,00,000 in a mutual fund, and after 5 years, the value grew to ₹2,00,000.
- Beginning Value (BV): ₹1,00,000
- Ending Value (EV): ₹2,00,000
- Number of Years (n): 5
Step 1: Divide EV by BV: 2,00,000 / 1,00,000 = 2
Step 2: Raise the result to the power of (1/n): 2 ^ (1/5) = 2 ^ 0.2 = 1.1487
Step 3: Subtract 1: 1.1487 - 1 = 0.1487
Step 4: Convert to percentage: 0.1487 * 100 = 14.87%
So, your investment grew at a CAGR of 14.87%.