Compound Annual Growth Rate — find the yearly return across your time horizon.
Compound Annual Growth Rate
14.87%
Initial Value100,000
Final Value200,000
Absolute Return100.00%
CAGR represents the steady annual growth rate that bridges your initial and final values over the given period.
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What is the CAGR Calculator?
Compound Annual Growth Rate (CAGR) is the average percentage increase per year from a starting value to an ending value over a multi-year period. Unlike simple annual averages, CAGR accounts for compounding—each year's gain builds on the previous year's total. It's the single number investors and business leaders use to compare the real performance of stocks, funds, startups, and sales growth.
How it works
The calculator takes your beginning value, ending value, and the number of years between them. It then applies the CAGR formula to find the steady annual growth rate that, if applied each year with compounding, would transform the starting value into the ending value. This assumes reinvestment or cumulative growth with no withdrawals.
CAGR = (Ending Value / Beginning Value)^(1 / Number of Years) - 1
Ending Value is your final amount; Beginning Value is what you started with; Number of Years is the span between them. The formula divides the ratio of values by the time period, then subtracts 1 to show growth as a percentage.
Examples
Input
Result
Notes
₹100,000 in year 1 → ₹160,000 in year 5 (4 years)
12.47% CAGR
Your investment grew by an average of 12.47% per year. Starting with ₹100k and earning 12.47% annually for 4 years lands you at ₹160k.
$50,000 in 2015 → $200,000 in 2023 (8 years)
20.05% CAGR
An 8-year growth rate of 20% per year is exceptional—typical for early-stage startups or high-growth funds. This shows 4x return over 8 years.
Business tripled in 5 years = 24.57% annual growth. Useful for spotting whether a startup or company is scaling fast or stagnant.
How to use the CAGR Calculator
Enter the Beginning Value—the amount you invested, started with, or measured at the start date.
Enter the Ending Value—the current amount or final amount after the time period.
Enter the Number of Years—count the full years between the two dates (e.g., 2020 to 2024 = 4 years).
Click Calculate to see your CAGR as a percentage.
Compare your CAGR to benchmarks: stock market average is ~10%, savings account ~4%, high-growth startups 25%+.
Use the result to decide: Is the growth strong enough? Should you stay invested or switch strategies?
Benefits
Compares apples-to-apples: CAGR neutralizes volatility, so you can fairly compare a 3-year mutual fund to a 10-year stock portfolio.
Cuts through noise: Ignore one good year or bad year—CAGR shows the real trend over time.
Easy to explain: Instead of saying 'we grew 15%, then fell 8%, then rose 22%,' you say 'CAGR of 11%'—crystal clear.
Better than simple average: A simple average of +15%, −8%, +22% is +9.67%, but with compounding (CAGR) it's only 8.2%—a real difference.
Benchmark your investments: Compare your personal returns to index funds (Nifty 50 averages ~12%) and decide if your strategy is beating the market.
Evaluate business growth: Founders and investors use CAGR to assess if a startup is scaling fast enough to justify risk and funding.
Tips & common mistakes
Common mistakes
Forgetting fractional years: Use decimals (e.g., 5.5 years, not 5 years) if your time span includes months—otherwise your CAGR will be wrong.
Mixing up beginning and ending values: Always put the earlier amount as 'Beginning' and later as 'Ending'—reversing them gives a negative CAGR.
Assuming CAGR guarantees future returns: CAGR shows past performance. It doesn't mean you'll earn the same rate next year—markets fluctuate.
Ignoring the length of the period: A 50% CAGR over 1 year is luck; over 10 years it's skill. Always check the time span.
Tips
Use CAGR for time spans of 3+ years to smooth out yearly volatility. For 1-2 years, simple percentage gain is more honest.
When comparing investments, always use the same start and end dates (e.g., Jan 1 to Dec 31) to keep CAGR fair and consistent.
Add CAGR to your investment spreadsheet: track multiple funds or portfolios side-by-side using this single number.
Expect CAGR to be lower than you think: compounding is powerful but realistic CAGRs for balanced portfolios are 8–12%, not 30%.
Frequently asked questions
Is CAGR the same as average annual return?
No. Average annual return is simple math (add all years, divide by count). CAGR accounts for compounding—your gains earn gains. CAGR is lower and more realistic.
Can CAGR be negative?
Yes. If your ending value is less than your beginning value, CAGR is negative. Example: ₹100k → ₹80k over 4 years = −5.73% CAGR (losing 5.73% per year).
What CAGR should I aim for?
It depends on risk and asset type. Indian stock market averages ~12% CAGR over decades. Real estate ~8–10%. Bonds ~5–7%. High-risk startups can hit 30%+ but often fail. Conservative savers should expect 4–6%.
Does CAGR account for taxes and inflation?
No. CAGR is the raw growth rate of your money. To find real returns, subtract inflation; to find net returns, subtract taxes and fees. This calculator shows the gross CAGR.
How do I use CAGR to predict future value?
Use the rearranged formula: Future Value = Present Value × (1 + CAGR)^Years. Example: if you earned 12% CAGR, ₹100k today could become ₹177k in 5 years. But past CAGR doesn't guarantee future results.
Which is better: high CAGR or low volatility?
Both matter. High CAGR with wild swings is risky; low CAGR with stability is safer. Use CAGR to measure growth and standard deviation (or tracking historical ups and downs) to measure risk. A good investment balances both.