CAGR Calculator
Calculate the Compound Annual Growth Rate of an investment between a beginning and ending value.
What is CAGR?
CAGR (Compound Annual Growth Rate) is the annualized rate at which an investment would have grown if it grew steadily every year — smoothing out real-world volatility into one comparable figure. It's widely used to compare mutual funds, stocks and business growth over different time periods.
CAGR Formula
CAGR = (Ending Value / Beginning Value)1/n − 1, where n is the number of years.
Example Calculation
An investment that grows from ₹1,00,000 to ₹2,00,000 over 5 years has a CAGR of approximately 14.87% — even though the absolute growth is 100%, the annualized figure accounts for the compounding effect over time.
Frequently Asked Questions
What is CAGR?
CAGR (Compound Annual Growth Rate) is the annualized rate at which an investment would have grown if it grew at a constant rate every year, smoothing out year-to-year volatility into a single comparable figure.
What is the CAGR formula?
CAGR = (Ending Value / Beginning Value)^(1/n) − 1, where n is the number of years.
CAGR vs absolute return — what is the difference?
Absolute return is the total percentage gain over the entire period, regardless of how long it took. CAGR annualizes that gain, making it possible to fairly compare investments held for different lengths of time.
Does CAGR account for volatility?
No — CAGR assumes smooth, consistent growth and does not reflect the ups and downs an investment actually experienced. Two investments with the same CAGR can have very different risk profiles.