What is CAGR and how is it calculated?

CAGR (Compound Annual Growth Rate) measures the annualized growth rate of an investment over a period longer than one year. The formula is: (Ending Value / Starting Value)^(1 / Years) - 1.

What is the difference between CAGR and total return?

Total return measures overall percentage gain across the entire holding period, whereas CAGR converts that gain into a constant annualized compounding rate.

CAGR Calculator

Calculate the annualized growth rate of your investment and see what your money could grow to over time.

Growth Parameters

1. Select Calculation Mode

tune Calculation Mode

2. Investment Values

payments Initial Investment / Starting Value

₹

account_balance_wallet Final / Ending Value

₹

trending_up Expected Annual CAGR (%)

schedule Investment Period (Years)

Supports fractional years (e.g., 2.5 years).

3. Optional Inflation Discounting

price_change Annual Inflation Rate (%)

Optional rate to compute Real (Inflation-Adjusted) CAGR.

ANNUALIZED GROWTH SUMMARY

14.87%

Compound Annual Growth Rate (CAGR)

Investment Multiple Factor POSITIVE ANNUALIZED GROWTH

Starting: ₹10,00,000 Multiple: 2.00x

Initial Value

₹10,00,000

Starting capital

Final / Future Value

₹20,00,000

Ending capital

Absolute Rupee Return

₹10,00,000

Total profit

Total Return %

100.00%

Overall gain %

Growth Multiple

2.00x

Asset multiplier

Real CAGR (Post-Inflation)

9.40% p.a.

After 5.0% inflation

CAGR vs. Total Return Comparison

Growth Metric Nominal Figures Compounded Rate

Starting Capital: ₹10,00,000 Year 0

Ending Asset Value: ₹20,00,000 5 Years

Total Absolute Profit: +₹10,00,000 +100.00%

                        Annualized Growth (CAGR):
                        —
                        14.87% p.a.
                    

Key Insights & Sensitivity

What Is CAGR and Why Does It Matter?

CAGR (Compound Annual Growth Rate) measures the constant annualized rate at which an investment grows from its starting value to its ending value over a specified period. It provides a clean, standardized annualized percentage that allows investors to compare assets held across different time horizons.

CAGR vs. Total Return: Understanding the Difference

A common mistake is confusing total percentage return with annual return. For example, if a property purchased for ₹10 Lakhs is sold for ₹20 Lakhs after 5 years, the total return is 100%. However, the annualized CAGR is 14.87% p.a., not 20% p.a., because compounding reinvests accumulated gains each year.

Investment Scenario	Starting Value	Ending Value	Period	Total Return %	Annualized CAGR
Property Appreciation A	₹75,00,000	₹1,50,00,000	10 Years	100.00%	7.18% p.a.
Equity Mutual Fund B	₹10,00,000	₹20,00,000	5 Years	100.00%	14.87% p.a.
Fixed Deposit C	₹10,00,000	₹13,50,000	4 Years	35.00%	7.79% p.a.

CAGR Formula and Calculation Architecture

The standard compound growth formula is:

CAGR = (Ending Value / Starting Value)^(1 / Years) − 1

In reverse mode (calculating future value):

Future Value = Starting Value × (1 + CAGR)^Years

5-Step Framework to Evaluate Annualized Returns

Step 01

Establish Starting Base

Determine your initial purchase price or initial capital outlay.

Step 02

Measure Ending Valuation

Obtain the current market value or final sale proceeds.

Step 03

Define Exact Time Horizon

Enter exact holding period in years (fractional years supported).

Step 04

Discount for Inflation

Convert nominal CAGR into Real CAGR using the Fisher equation to evaluate true purchasing power.

Step 05

Compare Across Asset Classes

Use CAGR to compare real estate appreciation against stocks, FDs, and gold.

Frequently Asked Questions

Can CAGR be negative?

Yes. If your ending asset value is lower than your starting investment, the resulting CAGR will be negative, representing annualized wealth contraction.

Is CAGR suitable for monthly SIPs or Home Loan EMIs?

No. CAGR assumes a single upfront investment and a single exit. For recurring monthly cash flows, internal rate of return (IRR / XIRR) is required.