How to use the CAGR Calculator
- 1
Enter the value at the start.
- 2
Enter the value at the end.
- 3
Enter the number of years between the two.
- 4
Read the CAGR alongside the absolute return and the gain.
The formula
CAGR = (End value ÷ Start value)^(1 ÷ years) − 1The result is the single yearly rate that turns the start value into the end value over the given years, assuming growth compounds once a year.
Worked example
An investment that grew from ₹1 lakh to ₹2.5 lakh in 7 years has an absolute return of 150%. Its CAGR is about 13.99% a year.
Tips
- Use CAGR for a single investment made at one time; for SIPs, use the XIRR calculator instead.
- Compare CAGR only over the same time period, since start and end dates change the result a lot.
- CAGR hides the ups and downs in between, so also look at how volatile the path was.
Frequently asked questions
What is the difference between CAGR and absolute return?
Absolute return is the total percentage gain, while CAGR is the yearly rate. A 150% gain sounds large, but over 7 years it is about 13.99% a year. CAGR lets you compare investments held for different lengths of time.
Can I use CAGR to measure my SIP returns?
No, CAGR assumes one investment at the start, while a SIP adds money every month. Using CAGR on a SIP understates or distorts the return. Use XIRR for SIPs, because it accounts for the date of each instalment.
What is a good CAGR for mutual funds?
There is no single good figure; it depends on the fund category, the period and market conditions. Compare a fund's CAGR with its benchmark and category over the same period rather than with a fixed number. Past CAGR does not guarantee future returns.
Can CAGR be negative?
Yes, if the end value is lower than the start value, CAGR is negative. For example, ₹1 lakh falling to ₹90,000 over two years gives a CAGR of about minus 5.1% a year. It shows the average yearly loss over that period.