CAGR Calculator
Find the compound annual growth rate between a starting and an ending value.
How it works
Divide the final value by the initial value, raise the result to the power of one over the number of years, then subtract 1. Multiply by 100 for a percentage. Total growth is the final value divided by the initial value, minus 1.
CAGR = (Final / Initial)^(1 / Years) − 1Example
₹1,00,000 growing to ₹2,00,000 in 5 years: the ratio is 2, and 2^(1/5) is about 1.1487, so the CAGR is 14.87% a year. Total growth is 100% and the absolute gain is ₹1,00,000.
Common mistakes
- Dividing total growth by the years. 100% growth over 5 years is 14.87% a year with compounding, not 20%.
- Using CAGR for investments made in several instalments. It assumes a single starting amount.
- Entering the number of months in the years field. 18 months is 1.5 years.
Results are estimates and are for informational purposes only.
About this calculator
CAGR is the single yearly rate that would take a starting value to an ending value over a given number of years, with growth compounding each year. Enter the initial value, the final value and the years (decimals are fine, so 2.5 years works).
CAGR smooths out the ups and downs, so it says nothing about how the value moved in between. It also assumes one lump sum at the start: it does not suit regular investments such as a monthly SIP, where money goes in at different times.
Frequently asked questions
How is CAGR calculated?
CAGR = (Final value / Initial value)^(1 / Years) − 1. For ₹10,000 growing to ₹20,000 in 5 years, that is 2^(0.2) − 1, or about 14.87% a year.
Why can't the initial value be zero?
The formula divides the final value by the initial value, and dividing by zero has no result. The calculator asks for an initial value above zero. A final value of zero is allowed and gives −100%.
How is CAGR different from average annual return?
An average simply adds up yearly returns and divides. CAGR accounts for compounding. If a value rises 50% and then falls 50%, the simple average is 0% a year, but you have lost money: the CAGR is about −13.4% a year.
Can I use it for SIP or other regular investments?
Not accurately. CAGR assumes one amount invested at the start and nothing added later. For money invested at different dates, a return measure that handles cash flows, such as XIRR, is the right tool.