Compound Annual Growth Rate Calculator
✓ Annualized Returns - Know exact yearly growth rate of investments
✓ Compare Investments - Compare funds/stocks with different time periods
✓ Smooths Volatility - Averages out market ups and downs
✓ Better than Absolute - Time-adjusted returns for accurate picture
✓ CAGR shows average yearly growth - best for comparing investments
150.00% absolute return
CAGR = [(FV / IV)^(1/n) - 1] × 100
Where:
• FV = Final Value (₹2,50,000)
• IV = Initial Value (₹1,00,000)
• n = Years (5)
Result: Your investment grew at 20.11% annually
Average yearly growth over 5 years
Yearly compounded return
Total % growth
Absolute / Years
💡 Insight: CAGR (20.11%) is more accurate than simple average (30.00%) because it accounts for compounding effect.
CAGR (Compound Annual Growth Rate) is the average annual growth rate of an investment over a specific period, assuming profits are reinvested. It smooths out volatility and shows what you actually earned per year, making it perfect for comparing investments with different time horizons.
Unlike absolute return which just shows total gain, CAGR accounts for time and compounding. Used by mutual funds, stocks, businesses, and professional investors worldwide. CAGR > 12% is considered excellent for long-term wealth creation in India.
Where:
• Final Value = Current value of investment
• Initial Value = Starting investment amount
• Years = Time period of investment
• ^ = Power/exponent operation
Given:
Calculation:
CAGR = [(2,50,000 / 1,00,000)^(1/5) - 1] × 100
= [(2.5)^(0.2) - 1] × 100
= [1.2011 - 1] × 100
CAGR = 20.11%
Your investment grew 20.11% per year!
Given:
Calculation:
CAGR = [(1,20,000 / 50,000)^(1/7) - 1] × 100
= [(2.4)^(0.1429) - 1] × 100
= [1.1344 - 1] × 100
CAGR = 13.44%
Solid performance beating Nifty average!
| Factor | CAGR | Absolute Return |
|---|---|---|
| Definition | Annualized growth rate | Total % gain |
| Time Factor | ✓ Considered | ✗ Ignored |
| Compounding | ✓ Included | ✗ Not included |
| Comparison | ✓ Fair comparison | ✗ Can&aps;t compare |
| Volatility | ✓ Smoothed out | ✗ Not smoothed |
| Use Case | Multi-year investments | Very short-term (< 1Y) |
| Industry Standard | ✓ Yes | ✗ Rarely used |
| Accuracy | High | Can be misleading |
Investment A:
• ₹1L → ₹1.5L in 2 years
• Absolute Return: 50%
• CAGR: 22.5%
Investment B:
• ₹1L → ₹2L in 5 years
• Absolute Return: 100%
• CAGR: 14.9%
Verdict:
Investment A is BETTER (22.5% > 14.9%)
Absolute return misleading - B shows 100% but A is actually superior!
✓ Use CAGR:
Use Absolute:
| Investment Type | Typical CAGR | Risk Level | Best For |
|---|---|---|---|
| Savings Account | 3-4% | Very Low | Emergency fund only |
| Fixed Deposits | 6-7% | Very Low | Short-term, capital safety |
| PPF / NSC | 7-7.7% | Very Low | Tax-free, long-term |
| Debt Mutual Funds | 7-9% | Low | 3-5 years, tax efficient |
| Gold | 8-10% | Moderate | Inflation hedge, 10% |
| Balanced Funds | 9-11% | Moderate | 5-7 years, balanced risk |
| Nifty 50 Index | 10-12% | Moderate-High | Long-term, diversified |
| Large Cap Equity | 10-13% | Moderate-High | 7-10 years, stable growth |
| Mid & Small Cap | 12-16% | High | 10+ years, aggressive |
| Sectoral/Thematic | 15-20% | Very High | Timing crucial, volatile |
💡 Target CAGR: Aim for minimum 12% CAGR for long-term wealth creation. This beats 6% inflation by 6%, creating real wealth. Top investors achieve 15-20% CAGR with disciplined equity investing.
₹1 Lakh grows to:
• 5 years: ₹1.76L (1.8X)
• 10 years: ₹3.11L (3.1X)
• 15 years: ₹5.47L (5.5X)
• 20 years: ₹9.65L (9.6X)
• 30 years: ₹29.96L (30X)
₹1 Lakh grows to:
• 5 years: ₹2.01L (2X)
• 10 years: ₹4.05L (4X)
• 15 years: ₹8.14L (8X)
• 20 years: ₹16.37L (16X)
• 30 years: ₹66.21L (66X)
₹1 Lakh grows to:
• 5 years: ₹2.29L (2.3X)
• 10 years: ₹5.23L (5.2X)
• 15 years: ₹11.97L (12X)
• 20 years: ₹27.39L (27X)
• 30 years: ₹1.43 Cr (143X)
Quick formula: Years to double = 72 / CAGR
8% CAGR
9 years
12% CAGR
6 years
15% CAGR
4.8 years
18% CAGR
4 years
CAGR (Compound Annual Growth Rate) is the average rate at which an investment grows annually over a specific period, assuming profits are reinvested. Formula: CAGR = [(Final Value / Initial Value)^(1/Years) - 1] × 100. Example: Invested ₹1 lakh, became ₹2.5 lakh in 5 years. CAGR = [(2.5/1)^(1/5) - 1] × 100 = 20.11%. This means your investment grew at 20.11% per year on average. CAGR smooths out volatility - if investment went ₹1L → ₹80K → ₹1.5L → ₹2L → ₹2.5L, CAGR still shows steady 20.11% annual growth. Key Points: CAGR assumes steady growth (not actual), includes compounding effect (reinvested gains), best for comparing investments, ignores interim volatility. Different from absolute return (150%) which just shows total gain without time context.
CAGR vs Absolute Return - Critical Difference: Absolute Return = Total % gain without considering time. Formula: [(Final - Initial) / Initial] × 100. Example: ₹1L → ₹2.5L = 150% absolute return. CAGR = Annualized growth rate considering time. Same example: 20.11% CAGR over 5 years. Why CAGR Better? Time-adjusted: 150% in 5 years (20% CAGR) is different from 150% in 1 year! Comparable: Compare Fund A (80% in 3Y) vs Fund B (120% in 5Y) - CAGR makes it fair. Realistic: Shows what you earned PER YEAR, not just total. Real Example: Investment A: ₹1L → ₹1.5L in 2 years = 50% absolute, 22.5% CAGR. Investment B: ₹1L → ₹2L in 5 years = 100% absolute, 14.9% CAGR. Which better? Investment A (22.5% CAGR) > Investment B (14.9% CAGR), even though B has higher absolute return! When to Use: CAGR: Multi-year comparisons, portfolio performance, mutual funds (always use CAGR for > 1 year). Absolute: Very short periods (< 1 year), quick calculation. Professional investors ALWAYS use CAGR for accurate picture.
CAGR Benchmarks by Investment Type (India, 10Y average 2015-2025): Savings Account: 3-4% CAGR - Poor, below inflation. Fixed Deposits: 6-7% CAGR - Safe but barely beats inflation. PPF/NSC: 7-7.7% CAGR - Tax-free, decent for debt. Debt Mutual Funds: 7-9% CAGR - Better than FD, tax efficient after 3Y. Gold: 8-10% CAGR - Inflation hedge, volatile short-term. Real Estate: 8-10% CAGR - Illiquid, location dependent. Balanced/Hybrid Funds: 9-11% CAGR - Good mix of safety & growth. Large Cap Equity: 10-13% CAGR - Lower volatility, consistent. Nifty 50 Index: 10-12% CAGR - Market average benchmark. Mid Cap Funds: 12-15% CAGR - Higher risk, higher returns. Small Cap Funds: 13-16% CAGR - Very volatile, long-term winners. Sectoral/Thematic: 15-20% CAGR - High risk, timing crucial. Good CAGR by Goal: Emergency Fund: 4-6% (safety priority). Short-term (1-3Y): 7-9% (debt focus). Medium-term (3-7Y): 10-12% (balanced). Long-term (7Y+): 12-15% (equity focus). Retirement (20Y+): 12-14% (compounding magic). Beat Inflation Target: Minimum 12% CAGR for real wealth creation (6% inflation + 6% real growth). Top Performers (Real Data): Nifty 50 (10Y): ~12% CAGR. HDFC Balanced Fund (10Y): ~13% CAGR. Axis Bluechip Fund (10Y): ~15% CAGR. SBI Small Cap (10Y): ~18% CAGR. Reality Check: Most retail investors achieve 8-10% CAGR due to poor timing, panic selling. Disciplined SIP investors get 12-15% CAGR long-term. Warren Buffett averages ~20% CAGR over 60 years (best ever!).
Mutual Fund CAGR Calculation Methods: Method 1 - Lump Sum Investment: Formula: CAGR = [(Current NAV / Purchase NAV)^(1/Years) - 1] × 100. Example: Bought at NAV ₹50, current NAV ₹120 after 5 years. CAGR = [(120/50)^(1/5) - 1] × 100 = 19.1%. Method 2 - SIP Investment (XIRR, not CAGR): SIP has multiple purchase dates at different NAVs - use XIRR (Extended Internal Rate of Return). CAGR = simple formula doesn't work for SIP! Excel Formula: =XIRR(values, dates) where values = -investments (negative) + current value (positive). Example: Jan 2020: -₹10K, Feb 2020: -₹10K, ..., Dec 2024: +₹7.5L (current value). XIRR might show 15.2% (your SIP return). Method 3 - Using Statement: Check mutual fund statement - most show CAGR/XIRR automatically. Zerodha/Groww apps show CAGR for lump sum, XIRR for SIP. Real Mutual Fund Example: Axis Bluechip Fund: Invested ₹5L on Jan 1, 2020 (NAV ₹35). Current Jan 1, 2025 (NAV ₹52), 5 years. CAGR = [(52/35)^(1/5) - 1] × 100 = 8.3%. Why Check CAGR? Compare with benchmark (Nifty CAGR ~12%). Evaluate fund manager performance. Decide to continue or switch funds. Common Mistakes: Using absolute return for long-term (wrong!). Not considering dividends (should be reinvested for accurate CAGR). Comparing different time periods without CAGR. Pro Tip: For mutual funds > 1 year, ALWAYS use CAGR/XIRR, not absolute return. Compare your fund CAGR with Nifty 50 CAGR - if lower, switch to index fund!
Yes, CAGR can be negative when investment value declines. Negative CAGR indicates annual loss rate. Example 1 - Loss Scenario: Initial: ₹2L, Final: ₹1.5L after 3 years. CAGR = [(1.5/2)^(1/3) - 1] × 100 = -11.3%. Meaning: You lost 11.3% per year on average. Example 2 - Volatile Path: Year 0: ₹1L. Year 1: ₹1.2L (+20%). Year 2: ₹90K (-25%). Year 3: ₹95K (+5.5%). CAGR = [(0.95/1)^(1/3) - 1] × 100 = -1.7%. Despite interim ups, overall lost 1.7%/year. Real World Examples (Negative CAGR): Yes Bank (2018-2023): -60% CAGR (disaster!). Vodafone Idea (2017-2023): -45% CAGR. Suzlon Energy (2010-2020): -25% CAGR. Kingfisher Airlines (complete wipeout). Bitcoin (2021-2022): -40% CAGR (before recovery). What Negative CAGR Tells You: Investment destroying wealth, not creating it. Exit signal - fundamental issue or market decline. Compare with benchmark - if Nifty +12% but stock -10%, very bad. Need to reassess - hold, average down, or exit? When Negative CAGR Acceptable: Short-term volatility (< 1 year) - wait for recovery. Entire market down (2008 crisis, 2020 COVID) - temporary. Tax-loss harvesting opportunity - book loss, offset gains. When to EXIT Immediately: Negative CAGR for 3+ years while market rising. Fundamental deterioration (debt, losses, management issues). Better alternatives available (opportunity cost). Negative CAGR worsening each year. Recovery Hope vs Reality: Many hold losing stocks hoping for recovery (sunk cost fallacy). If negative CAGR, ask: Would I buy this TODAY at current price? If NO, then exit! First loss is best loss - don't let negative CAGR compound. Pro Strategy: Set stop-loss at 25-30% from purchase. If negative CAGR > -10% for 2+ years, review fundamentals critically. Exit if no clear recovery path in sight.
Future Value Calculation using CAGR: Formula: Future Value = Initial Value × (1 + CAGR/100)^Years. Example Scenarios at 15% CAGR for 10 years: Starting ₹50,000: FV = ₹50K × (1.15)^10 = ₹2,02,278 (4X growth). Starting ₹1 Lakh: FV = ₹1L × (1.15)^10 = ₹4,04,556 (4X growth). Starting ₹5 Lakh: FV = ₹5L × (1.15)^10 = ₹20,22,780 (4X growth). Starting ₹10 Lakh: FV = ₹10L × (1.15)^10 = ₹40,45,560 (4X growth). Pattern: At 15% CAGR, money quadruples (4X) in 10 years! Different CAGR Comparison (₹1L initial, 10Y): 8% CAGR: ₹2,15,892 (2.2X). 10% CAGR: ₹2,59,374 (2.6X). 12% CAGR: ₹3,10,585 (3.1X). 15% CAGR: ₹4,04,556 (4X). 18% CAGR: ₹5,23,383 (5.2X). 20% CAGR: ₹6,19,174 (6.2X). Key Insight: 2-3% CAGR difference = Huge wealth gap over time! 12% vs 15% = ₹94K difference on ₹1L in 10Y. Compounding Magic - Time Periods at 15% CAGR (₹1L initial): 5 years: ₹2,01,136 (2X). 10 years: ₹4,04,556 (4X). 15 years: ₹8,13,706 (8X). 20 years: ₹16,36,654 (16X). 25 years: ₹32,91,895 (33X). 30 years: ₹66,21,177 (66X). Doubling Time at Different CAGR (Rule of 72): 72 / CAGR = Years to double. 8% CAGR: 9 years. 10% CAGR: 7.2 years. 12% CAGR: 6 years. 15% CAGR: 4.8 years. 18% CAGR: 4 years. Real Life Application: Goal: ₹1 Crore in 15 years at 15% CAGR. Required investment = ₹1 Cr / (1.15)^15 = ₹12.29 lakh today. OR Monthly SIP = ₹15,500 for 15 years. Warren Buffett Example: Started with $10,000 in 1950s. 20% CAGR for 60 years. Net worth: $100+ billion! 10,000,000X growth from compounding. Realistic Expectations India: Equity: Expect 12-15% CAGR long-term (realistic). 15% CAGR = Excellent performance (Nifty average ~12%). 18%+ CAGR = Exceptional (hard to sustain). Debt: 7-9% CAGR maximum (FD, bonds, PPF). Balanced: 10-12% CAGR (mix of debt & equity). Action Plan for 15% CAGR: Invest in equity mutual funds (large + mid cap mix). SIP for rupee cost averaging. Hold minimum 10-15 years (don't panic sell). Review annually, rebalance if needed. Stay disciplined - this is the secret!