Free Online Financial Calculator
Calculate the Compound Annual Growth Rate of your investment in seconds. Understand how your investment value has grown annually over a selected period with our free and easy-to-use CAGR Calculator.
Simple calculations. Clear results. Smarter financial understanding.
Calculator
Enter your initial investment value, final investment value and holding period. The calculator instantly shows the compound annual growth rate along with the absolute gain or loss.
Compound Annual Growth Rate
+14.87%
Annualised growth per year over the selected period
Initial Investment
₹1,00,000
Final Investment
₹2,00,000
Absolute Gain
+₹1,00,000
Total Investment Period
5 years
Total Percentage Change
+100.00%
Bar chart: initial investment ₹1,00,000, final investment ₹2,00,000.
Please note: CAGR represents a smoothed annualised growth rate based on the values and period you enter. It does not describe the actual return earned in every individual year and it does not account for interim deposits, withdrawals, taxes, fees or inflation. Investments with multiple cash flows may require XIRR instead.
Worked Example
An illustrative example to help you understand how the formula works.
The calculation uses the standard CAGR formula:
CAGR = [(Final Value ÷ Initial Value)(1 ÷ Years) − 1] × 100
Substituting the values: CAGR = [(2,00,000 ÷ 1,00,000)(1 ÷ 5) − 1] × 100. The ratio is 2, raised to the power of 1 ÷ 5 (that is 0.2), which equals approximately 1.1487. Subtracting 1 gives 0.1487, and multiplying by 100 gives approximately 14.87% per year.
This means the investment grew at a smoothed annual rate of about 14.87% per year over those five years. It does not mean the investment grew by exactly 14.87% in each individual year — the actual year-by-year journey could have been very different.
This is an illustrative example only. It is not an actual fund return, a market prediction, or an investment recommendation.
Financial Education
Clear explanations to help you read investment numbers with confidence.
CAGR stands for Compound Annual Growth Rate. It is the single, steady annual rate at which an investment would have grown from its starting value to its ending value over a given period, assuming the growth was compounded every year.
Real investments rarely grow at a constant pace. One year may be strong, another may be flat, and another may fall. CAGR does not try to describe that bumpy path. Instead, it answers a simpler and very useful question: “If this investment had grown at one steady compounded rate every year, what rate would produce the same final value?”
That is why CAGR is often called a smoothed annualised return. It makes it possible to compare investments held for different lengths of time on a common, per-year basis.
CAGR = [(Final Value ÷ Initial Value)(1 ÷ Number of Years) − 1] × 100
Each part of the formula has a specific role:
When the period includes months, the calculator converts them into a fraction of a year first:
Total Years = Years + (Months ÷ 12)
For example, 4 years and 6 months becomes 4 + (6 ÷ 12) = 4.5 years. The same total is then used inside the CAGR formula.
CAGR is widely used because it puts investments of different durations on the same footing. A 30% total return over three years and a 30% total return over eight years are not comparable at face value — but their CAGR figures are directly comparable.
CAGR is a measurement tool, not a forecast. A high historical CAGR tells you what happened in the past — it does not tell you what will happen next. If you are evaluating regular monthly investments rather than a single lump sum, the XIRR Calculator is usually the more appropriate tool.
Absolute return measures the total percentage change in value, ignoring how long the investment was held. CAGR expresses that same growth as a compounded annual rate.
| Basis | CAGR | Absolute Return |
|---|---|---|
| Meaning | The compounded annual rate at which an investment grew. | The total percentage change in value over the whole period. |
| Time factor | Accounts for the length of the holding period. | Ignores the length of the holding period. |
| Typical presentation | Expressed as a percentage per year. | Expressed as a single total percentage. |
| Common use | Comparing investments held for different durations. | Quickly describing total gain or loss on a position. |
| Important limitation | Assumes steady compounded growth; ignores volatility and interim cash flows. | Can be misleading when comparing investments of different durations. |
A simple illustration: a 50% absolute return earned over two years is a very different outcome from the same 50% earned over ten years. Absolute return shows the same number in both cases; CAGR shows roughly 22.47% per year in the first case and about 4.14% per year in the second.
Both measures describe annualised returns, but they are built for different situations.
| Basis | CAGR | XIRR |
|---|---|---|
| Cash flow pattern | A single investment at the start and a single value at the end. | Multiple cash flows at different dates, both in and out. |
| Suitable for | Lump sum investments and one-time purchases. | SIPs, staggered investments, withdrawals and irregular contributions. |
| Timing sensitivity | Does not consider the timing of interim cash flows. | Weights every cash flow by the exact date it occurred. |
If you invested a single amount and left it untouched, CAGR is usually the right measure. If you invested through a monthly SIP, added money at intervals, or withdrew part of the corpus along the way, CAGR will not capture the true picture. In those cases, use the XIRR Calculator instead.
CAGR is useful, but it is important to understand what it leaves out.
FAQs
Straight answers to the questions investors ask most often.
A CAGR Calculator is a tool that converts an investment's starting value, ending value and holding period into a single annualised growth rate. Instead of showing the total change in value, it shows the steady compounded rate per year that would produce the same outcome.
Divide the final value by the initial value, raise the result to the power of 1 divided by the number of years, subtract 1, and multiply by 100. For example, ₹1,00,000 growing to ₹2,00,000 in 5 years gives a CAGR of about 14.87% per year. You can also simply enter the values into the calculator above.
There is no universal answer. What counts as a good CAGR depends on the asset class, the level of risk taken, the length of the period, inflation, and your own financial goals. A rate that looks impressive over a short period may look ordinary over a long one, and vice versa. Compare similar investments over similar periods, and treat CAGR as one input among several — not a verdict.
Yes. If the final value is lower than the initial value, the CAGR will be negative. This indicates an annualised decline over the period. If the two values are exactly equal, the CAGR is 0%.
No. Absolute return is the total percentage change in value over the whole period and takes no account of time. CAGR expresses that change as a compounded annual rate. A 50% absolute return is the same number whether it took two years or ten — but the CAGR is very different in each case.
No. A SIP involves many investments at different dates, so there is no single “initial investment” to work from. CAGR is designed for a single lump sum at the start and a single value at the end. For SIPs, use an XIRR Calculator, which accounts for the timing of each instalment.
CAGR works when there is one investment at the start and one value at the end. XIRR works when there are multiple cash flows at different dates — such as monthly SIP instalments, top-ups or partial withdrawals. XIRR weights each cash flow by the date it occurred, which makes it more accurate for irregular investment patterns.
No. CAGR is a historical measurement of what already happened between two values over a defined period. It cannot predict or guarantee what an investment will do in the future. Market returns vary, and past performance is not an indicator of future results.
Not automatically. The formula only uses the two values and the period you enter. If you want a post-tax or post-expense view, use a final value that is already net of taxes and charges. This is why it is worth reviewing both the gross and net figures when evaluating an investment.
It can help, provided you compare funds over the same period and use consistent values. However, CAGR alone is not sufficient to select a mutual fund. You should also consider the fund's category, risk level, expense ratio, portfolio holdings, exit load, taxation and your own investment horizon and goals. Mutual fund investments are subject to market risks.
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