What is the CAGR Calculator?
Compound Annual Growth Rate (CAGR) is the smoothed annual rate at which an investment grew from one value to another over a period. Unlike absolute return it's directly comparable across time horizons and instruments.
If a fund returned 18% one year and −5% the next, the CAGR tells you the equivalent steady annual rate — usually a much more honest number.
Formula
CAGR = ((Final / Initial)^(1/n) − 1) × 100
- Final — Ending value
- Initial — Starting value
- n — Number of years
Step-by-step example
Setup: ₹1,00,000 grew to ₹2,50,000 over 5 years.
- Ratio = 2.5
- 2.5^(1/5) = 1.2011
- CAGR = 20.11%
Answer: CAGR ≈ 20.11% · Absolute return = 150%
Frequently asked questions
Is CAGR the same as average return?
No. Simple averages overstate growth when returns vary; CAGR is the true compounded equivalent.
When does CAGR mislead?
When the investment had large interim volatility — CAGR hides the bumpy ride. Pair it with standard deviation for the full picture.