CAGR Calculator

CAGR Calculator Inputs
Data Visualization & Insights

What is CAGR (Compound Annual Growth Rate)?

The Compound Annual Growth Rate (CAGR) measures the annual growth rate of an investment over a specific period, assuming profits are reinvested yearly. It’s a key metric for evaluating how investments like mutual funds, stocks, or portfolios perform over time.

How is CAGR Calculated?

CAGR uses a straightforward formula to show annualized growth:

CAGR = (Ending Value / Beginning Value)^(1 / Years) - 1
Where:
Ending Value is the final investment value,
Beginning Value is the initial investment amount, and
Years is the total investment duration.

Why is CAGR Important?

Uniform Growth Metric

Offers a consistent way to measure returns across investments.

Simplifies Comparisons

Easily compare performance of different investments over varying timeframes.

Reduces Volatility Noise

Smooths out market ups and downs for a clearer picture.

Tracks Long-Term Growth

Ideal for assessing multi-year performance of stocks or funds.

Boosts Financial Planning

Helps forecast future growth and set achievable goals.

CAGR Example

Imagine investing ₹100,000, which grows to ₹200,000 in 5 years. Here’s the CAGR:

CAGR = (200,000 / 100,000)^(1/5) - 1 = 2^(0.2) - 1 ≈ 14.87%

This shows your investment grew at an average rate of 14.87% annually over 5 years.

CAGR FAQs

CAGR reveals the average yearly growth rate of an investment, assuming steady compounding. It’s perfect for gauging long-term performance.

A “good” CAGR varies by investment type. For stocks, 12-15%+ often beats benchmarks like inflation or indices, but context matters.

No, annual returns fluctuate yearly, while CAGR averages growth over the entire period for a steady rate.

It hides volatility, risk, and yearly fluctuations—two investments with the same CAGR could differ wildly in stability.

CAGR shines for long-term analysis and comparing investments like mutual funds or real estate over multiple years.