CAGR (Compound Annual Growth Rate) is the constant annual rate at which an investment would have grown from its starting value to its ending value over a period, assuming profits are reinvested each year.

How is CAGR calculated?

CAGR = (Ending Value ÷ Starting Value)^(1 ÷ Years) − 1. Example: ₹1,00,000 growing to ₹2,59,374 in 5 years implies CAGR ≈ 21% per year.

When should I use CAGR instead of average return?

Use CAGR when you want a single annualised figure across multiple years with compounding. Simple average of yearly returns can overstate performance when volatility is high.

CAGR Calculator — Free Compound Annual Growth Rate Tool

How to calculate CAGR on an investment

Investors use a CAGR calculator when they know starting capital, ending value, and holding period but want one annualised number for comparison across funds, PMS mandates, or personal portfolios.

The formula

CAGR answers: if my wealth grew smoothly every year with compounding, what constant rate would produce this outcome? The formula is CAGR = (EV ÷ SV)^(1/n) − 1, where EV is ending value, SV is starting value, and n is years.

What CAGR does not tell you

CAGR hides path dependency. Two portfolios with the same CAGR can feel very different if one had a deep drawdown mid-period. Pair CAGR with drawdown and behaviour tools before making allocation decisions.

Ignores cash flows (SIPs, withdrawals) — use a money-weighted return for those.
Past CAGR is not a forecast of future returns.
Compare like periods (same start/end dates) when benchmarking products.

Illustrative only — not investment advice. Past scenarios do not guarantee future results. Consult a qualified professional before investing.