CAGR Calculator – Compound Annual Growth Rate
Calculate the Compound Annual Growth Rate (CAGR) from any initial and final value, or project the future value of an investment using a known CAGR. Get total growth, growth percentage, and a year-by-year growth table instantly.
What is CAGR?
CAGR (Compound Annual Growth Rate) is the rate at which an investment grows from its initial to its final value over a given number of years, assuming profits are reinvested each year. Unlike simple growth percentage, CAGR accounts for compounding and gives a single, smoothed annualised rate that is easy to compare across investments.
It is widely used in finance to compare mutual fund performance, stock returns, business revenue growth, and any other metric that changes over time.
CAGR Formula
Calculate CAGR:
CAGR = (Final Value / Initial Value)^(1/N) − 1
Calculate Future Value:
FV = Initial Value × (1 + CAGR)^N
N = number of years
Example: ₹1,00,000 invested in a mutual fund grew to ₹1,80,000 in 5 years. CAGR = (1.8)^(0.2) − 1 = 12.47% per year.
CAGR Benchmarks in India
| Asset Class | Typical 10-Year CAGR |
|---|---|
| Large-cap equity mutual funds | 10–14% |
| Mid/small-cap equity funds | 13–18% |
| Fixed Deposit (FD) | 5–7% |
| PPF | 7–8% |
| Gold | 8–10% |
| Real estate (metro cities) | 6–10% |
Past performance is not a guarantee of future returns. These are historical indicative ranges.
Frequently Asked Questions
What is CAGR?
CAGR stands for Compound Annual Growth Rate. It is the rate at which an investment grows from its initial to its final value over a period of years, assuming profits are reinvested each year. CAGR smooths out volatility to give a single annualised growth rate.
What is the CAGR formula?
CAGR = (Final Value / Initial Value)^(1/N) - 1, where N is the number of years. For example, if ₹1,00,000 grows to ₹1,80,000 in 5 years, CAGR = (1.8)^(1/5) - 1 = 12.47%.
What is a good CAGR for investments?
For equity mutual funds in India, a 12–15% CAGR over 5–10 years is considered good. Fixed deposits offer around 6–7%. Comparing CAGR helps evaluate whether an investment is outperforming inflation and alternatives.
What is the difference between CAGR and absolute return?
Absolute return measures total growth without accounting for time. CAGR adjusts for the time period, making it ideal for comparing investments held for different durations. A 100% absolute return over 10 years is only a 7.18% CAGR.
Can CAGR be negative?
Yes. A negative CAGR means the investment lost value. If ₹1,00,000 fell to ₹80,000 over 5 years, CAGR is approximately -4.35%. Negative CAGR indicates the investment underperformed over the period.
How is CAGR used in mutual fund investing?
Mutual fund returns are quoted as CAGR for periods of 1 year and above. A 5-year CAGR of 14% means ₹1 lakh grew to approximately ₹1.93 lakh. Use our calculator to verify published fund returns or project future values.
What is the difference between CAGR and XIRR?
CAGR assumes a single lump-sum investment. XIRR accounts for multiple cash flows at irregular intervals — more accurate for SIP investments. For a one-time lump sum, CAGR and XIRR give identical results.
How do I calculate future value using CAGR?
Future Value = Initial Value × (1 + CAGR/100)^N. For example, ₹5,00,000 at 12% CAGR for 10 years = ₹5,00,000 × (1.12)^10 = ₹15,52,924. Switch to "Future Value" mode in our calculator above.
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