CAGR Calculator

What is CAGR?

The Compound Annual Growth Rate (CAGR) is a financial metric that calculates the annualized return on an investment over a period of time, assuming a steady rate of return. Unlike absolute returns, CAGR smooths out volatility, making it ideal for mutual funds, stocks, fixed deposits, and real estate investments.

How is CAGR Used in Investments?

1️⃣ CAGR in Mutual Funds & Stocks

Investors use CAGR to compare mutual funds, stocks, and ETFs. It helps them understand how consistently an asset has performed over time.

Example: If a mutual fund grows from ₹10,000 to ₹20,000 in 5 years, CAGR provides a clear picture of its average annual growth.

2️⃣ CAGR in Real Estate

Real estate investors use CAGR to measure property appreciation over the years.

Example: If you bought a property for ₹50 lakh and its value increased to ₹80 lakh in 10 years, CAGR tells you the annualized growth rate.

3️⃣ CAGR in Business Revenue & Sales Growth

Businesses analyze CAGR to measure sales growth, revenue trends, and company expansion over time.

Example: If a company's revenue was ₹5 crore five years ago and is now ₹12 crore, CAGR helps determine its annual growth rate.

How to Use the CAGR Calculator?

Enter the Beginning Value (₹): Initial investment amount.

Enter the Ending Value (₹): Final investment value after the period.

Enter the Number of Years: The duration for which the investment was held.

Click "Calculate" to get the CAGR percentage.

CAGR Calculation Formula

The formula to calculate CAGR is:

CAGR = (Ending Value / Beginning Value) ^ (1 / Number of Years) - 1

Example Calculation

Suppose you invested ₹1,000 in a fund, and after 5 years, it grew to ₹1,500. The CAGR can be calculated as follows:

Beginning Value = ₹1,000
Ending Value = ₹1,500
Number of Years = 5
CAGR = (1500 / 1000) ^ (1 / 5) - 1 = 8.45%

Frequently Asked Questions

What is CAGR in simple terms?

CAGR is the average annual growth rate of an investment over a period of time, assuming a steady rate of return.

Why is CAGR important for investors?

CAGR helps investors compare investment options like mutual funds, stocks, real estate, and business revenue trends on a common scale.

How is CAGR different from absolute returns?

Absolute return only shows total growth, while CAGR smooths out fluctuations, making it a better measure for long-term performance.

What is a good CAGR percentage?

A good CAGR depends on the investment type. Generally:

• Equity Investments: 12-15% CAGR is considered good.
• Fixed Deposits: 5-7% CAGR is common.
• Real Estate: 8-12% CAGR is standard.