CAGR Calculator
Calculate the Compound Annual Growth Rate (CAGR) of your investments with our free online tool. Determine the smoothed annualized return of your portfolio over a specific time period.
Investment Details
CAGR Results
Compound Annual Growth Rate
14.87%
Absolute Return
₹1,00,000
Total Return (%)
100.00%
What is CAGR?
Compound Annual Growth Rate (CAGR) measures the smoothed annualized return of an investment over a specified time period. It eliminates the volatility of year-to-year returns and shows you the steady rate at which your investment grew.
The CAGR Formula
The mathematical formula to calculate CAGR is:
Why Use CAGR Over Absolute Return?
Absolute Return is Misleading
Absolute return simply tells you how much your investment grew from point A to point B. For example, a 50% return looks great, but if it took 10 years to achieve, it's a very poor performance (less than 5% per year).
CAGR Normalizes Time
CAGR gives you the annualized rate of return, assuming constant growth. This allows you to fairly compare a 3-year investment with a 5-year investment to see which one actually performed better on an annualized basis.
Frequently Asked Questions
What is CAGR?
Compound Annual Growth Rate (CAGR) is the measure of an investments annual growth rate over time, assuming profits were reinvested at the end of each year.
Why is CAGR important?
CAGR smooths out the volatility of market returns. Instead of showing wild swings year-over-year, it provides a single, steady rate at which your investment would have grown if it grew at a constant rate.
What is a good CAGR?
A "good" CAGR depends on the asset class and inflation. For equity mutual funds in India, a long-term CAGR of 12% to 15% is generally considered good. For debt funds, it might be 6% to 8%.
How is CAGR different from absolute return?
Absolute return only measures the total growth percentage from start to finish, ignoring the time it took. CAGR factors in the time period, giving you the annualized growth rate, which is better for comparing investments of different durations.