CAGR Calculator
Calculate the Compound Annual Growth Rate of any investment. CAGR shows you the smoothed annual return, eliminating year-to-year volatility.
CAGR
20.11%
per annum
Absolute Return
150.0%
total
Your investment grew from ₹1.00 L to ₹2.50 L at 20.11% CAGR over 5 years
Frequently Asked Questions
What is CAGR?
CAGR (Compound Annual Growth Rate) represents the smoothed annual rate at which an investment grows. Formula: CAGR = (Final Value / Initial Value)^(1/Years) - 1. It eliminates year-to-year volatility to show a consistent growth rate.
What is the difference between CAGR and absolute return?
Absolute return shows total percentage growth regardless of time (e.g., 150% in 5 years), while CAGR shows annualized growth (e.g., 20% per year). CAGR is better for comparing investments over different time periods.
What is a good CAGR in India?
In Indian markets: 7-8% for FDs/debt funds, 12-14% for Nifty 50/large-cap, 15-20% for mid-cap, 18-25% for small-cap over 10+ year periods. Anything above 15% CAGR over 5+ years is considered excellent.
How to calculate CAGR of a mutual fund?
Use the formula: CAGR = (Current NAV / NAV at purchase)^(1/years) - 1. Example: NAV grew from ₹100 to ₹250 in 5 years → CAGR = (250/100)^(1/5) - 1 = 20.11% per annum. Or simply use our calculator above.
How to Use This CAGR Calculator
Enter your initial investment value, the final value after growth, and the number of years the investment was held. The calculator computes the annualized growth rate, helping you compare returns across different assets and time periods.
Common Use Cases
- Comparing mutual fund performance across different periods
- Evaluating stock portfolio growth vs benchmark (Nifty 50)
- Analyzing real estate appreciation over years
- Measuring business revenue growth rate
Understanding CAGR Limitations
CAGR smooths out volatility and shows a straight-line growth rate, which means it doesn't reflect the actual year-to-year fluctuations. A fund showing 15% CAGR may have had years of -20% and +40%. Always look at rolling returns (1Y, 3Y, 5Y) alongside CAGR for a complete picture. CAGR is most useful for comparing investments over the same time period.
What is CAGR and why it matters
Compound Annual Growth Rate (CAGR) smooths volatile year-to-year returns into a single annualized figure. If your ₹1 lakh grew to ₹2.5 lakh in 5 years, CAGR = (2.5/1)^(1/5) − 1 ≈ 20.1%. This is the standard metric for comparing mutual funds, stocks, and portfolio performance across different time horizons — more meaningful than simple average returns.
SEBI mandates that mutual funds display point-to-point and CAGR returns in factsheets. When evaluating funds on IPOFins, compare 3-year and 5-year CAGR within the same category (Large Cap vs Mid Cap) rather than across categories. Past CAGR does not guarantee future performance.
CAGR vs absolute return vs XIRR
Absolute return ignores time: +80% over 4 years sounds great but may be only 16% CAGR. XIRR handles irregular cash flows (SIPs, withdrawals) — use our SIP calculator for SIP projections and this CAGR tool for lumpsum or end-value comparisons. For mutual fund SIPs with monthly investments, XIRR is more accurate than CAGR on invested amount alone.
Benchmark CAGR expectations (India)
Historical 10-year CAGRs (indicative): Nifty 50 large-cap ~12–13%, Nifty Midcap 150 ~15–17%, small-cap indices higher but with deeper drawdowns. Fixed deposits deliver 6–7% pre-tax. PPF currently ~7.1% tax-free. Use these benchmarks to sanity-check your portfolio CAGR — if your equity CAGR is below FD returns over 7+ years, review fund selection on our best mutual funds page.
How fund managers use CAGR
Rolling returns (e.g., 3-year CAGR calculated every month for the past 10 years) show consistency better than a single CAGR snapshot. A fund with 14% CAGR but high volatility may suit aggressive investors; a 11% CAGR with lower standard deviation may suit conservative portfolios. Check category rank and Smart Money institutional activity for additional context.