CAGR Calculator
Find the compound annual growth rate between a starting and ending value over any number of years — the standard way to compare returns across different periods.
Compound Annual Growth Rate
20.11%
per year, over 5 years
Absolute return
150.00%
Growth multiple
2.50×
Total gain
₹1,50,000
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Tools that naturally follow this calculation.
Smoothed growth path at this CAGR
The actual journey almost certainly was not this smooth — CAGR shows the equivalent constant rate.
- Value at CAGR
Example calculation
(₹2,50,000 ÷ ₹1,00,000)1/5 − 1 = 20.11% per year. The absolute return is 150.00%, but spreading it across 5 years gives the annualised figure that lets you compare this investment with others held for different periods.
What is CAGR?
Compound Annual Growth Rate (CAGR) is the constant yearly rate at which an investment would have had to grow to go from its starting value to its ending value over a given period. It smooths out year-to-year ups and downs into one comparable number.
CAGR formula
CAGR = (Ending value ÷ Starting value)1 / years − 1
Absolute return, by contrast, is simply (Ending − Starting) ÷ Starting and ignores how long the money was invested.
When CAGR is not enough
CAGR assumes a single investment at the start and a single value at the end. If you invested at several dates — as in a SIP — the correct measure is XIRR, which accounts for the timing of each cash flow. See our CAGR vs XIRR guide or use the XIRR calculator.
Worked example: 75% over 4 years
Suppose a one-time investment of ₹2,00,000 is worth ₹3,50,000 after 4 years. The absolute return is (3,50,000 − 2,00,000) ÷ 2,00,000 = 75%. The CAGR is (3,50,000 ÷ 2,00,000)1/4 − 1 = 1.750.25 − 1 ≈ 15.0% per year.
Notice that 75% over 4 years is not 18.75% a year (75 ÷ 4). Because growth compounds, the equivalent annual rate is lower. This is exactly why CAGR — not absolute return divided by years — is the right way to compare a 4-year investment with, say, a 7-year one.
How to use CAGR sensibly
- Compare like with like. A 3-year CAGR and a 10-year CAGR of the same fund can differ sharply; compare investments over the same window.
- Short periods mislead. CAGR over one year or less is just the absolute return and says nothing about consistency.
- Look beyond the average. Two investments with identical CAGR can have very different year-to-year volatility; CAGR hides the bumps.
- Adjust for inflation. A 10% CAGR during 6% inflation is roughly a 3.8% real return (
1.10 ÷ 1.06 − 1). Use the Inflation calculator to see purchasing power.
Limitations
CAGR ignores everything that happened between the two dates — additional purchases, withdrawals, dividends taken out and volatility. It also says nothing about risk or about whether the past rate will continue. Treat it as a descriptive statistic for a completed period, not a forecast.
Assumptions & what this calculator does not include
- •Assumes one investment at the start and one value at the end.
- •Ignores interim cash flows, dividends withdrawn, or additional purchases.
- •Fractional years are supported (e.g. 2.5 years).
- •Past CAGR is descriptive only and does not predict future returns.
Frequently asked questions
Methodology last reviewed: 16 October 2026
How we maintain this page: the formula is covered by automated tests, default rates that depend on government notification are re-checked when a revision is announced, and the content and links are re-read when a reader reports an issue or the page is edited. See our Calculator Methodology and Corrections Policy.