CAGR Calculator

What is CAGR and why does it matter?

Compound Annual Growth Rate (CAGR) is the single most used metric for comparing investment returns across different assets and time horizons in India. It answers the question: "If my investment grew from ₹X to ₹Y over N years, what steady annual growth rate would have produced that outcome?" The answer strips away the noise of year-to-year fluctuations and gives a clean, annualised number that you can compare against other assets.

For example, suppose you invested ₹1 lakh in a mutual fund in 2014 and it grew to ₹3.5 lakh by 2024. The absolute return is 250%. But comparing that 250% absolute return to an FD's 7% annual return is meaningless — the time periods must be normalised. The CAGR over 10 years is (3.5/1)^(1/10) − 1 = 13.3% per year, which can be legitimately compared to the FD's 7% per year.

The CAGR formula

There is only one formula:

The inverse — finding the future value given a CAGR — is simply:

This is the compound interest formula, and CAGR is literally the compound interest rate that connects the two endpoints.

What CAGR does not tell you

CAGR is an endpoint-to-endpoint measurement. It is entirely blind to the path taken between those two endpoints. An investment that went up 50%, then down 40%, then up 60% over three years has a CAGR of approximately 13.4% — identical to an investment that went up exactly 13.4% each year. But the investor in the volatile path would have experienced a stomach-churning 40% drawdown in year 2. CAGR conceals this.

This is why fund fact sheets also report metrics like standard deviation (a measure of annual return volatility), maximum drawdown (the peak-to-trough decline), and Sharpe ratio (excess return per unit of volatility). A fund with a 15% CAGR and a Sharpe ratio of 0.4 is not necessarily better than one with a 12% CAGR and a Sharpe of 0.8.

CAGR vs. XIRR — which should you use?

CAGR is appropriate for lumpsum investments where there is one entry and one exit. For SIPs and other multi-period cash flows, the correct metric is XIRR (Extended Internal Rate of Return), which accounts for the exact dates and amounts of each cash flow. A SIP that has returned "12% CAGR" at the fund level does not mean your XIRR is 12% — your personal XIRR depends on when you invested each instalment and when you redeemed.

AMFI regulations require mutual funds to report returns for standard periods (1Y, 3Y, 5Y, since inception) as CAGR for lumpsum investments and as XIRR for SIP returns. Always check which metric is being quoted when comparing fund performance.

How CAGR is used to evaluate businesses

Beyond personal investments, CAGR is a central metric in equity research. Analysts track revenue CAGR, earnings per share (EPS) CAGR, and PAT CAGR over 3, 5, and 10-year windows to judge a company's growth trajectory. A consumer staples company compounding revenue at 12% CAGR over a decade is growing significantly faster than the nominal GDP rate of roughly 10–12%, suggesting market share gains or pricing power. When you see "Company X has delivered 18% EPS CAGR over the last 5 years" in an equity note, this is the same formula — applied to corporate earnings rather than portfolio values.

The comparison context panel in the calculator above provides illustrative historical CAGR figures for Nifty 50, Sensex, CPI inflation, and bank FDs. These benchmarks are drawn from publicly available historical data and are included solely for educational context — they are not a projection of future returns.

This page is educational only and does not constitute investment advice. Historical CAGR figures cited are illustrative and based on publicly available data; they are not indicative of future performance. Mutual fund and equity investments are subject to market risks. Consult a SEBI-registered investment adviser before making investment decisions.