CAGR Calculator
Easily calculate your Compound Annual Growth Rate (CAGR) based on your initial investment, final amount, and investment duration.
CAGR Result
This is the annualized growth rate your investment achieved.
CAGR (Annual Growth Rate)
%
What is CAGR (Compound Annual Growth Rate)?
CAGR, or Compound Annual Growth Rate, is the rate at which an investment would have grown if it had grown at the same rate every year, compounding annually. It gives a smooth annual growth rate by ignoring volatility or fluctuations over the investment period.
CAGR is widely used to compare investment options, analyze mutual fund performance, and forecast returns on equity, real estate, or business investments over time.
How is CAGR Calculated?
The standard formula for CAGR is:
- Initial Value: The amount you originally invested.
- Final Value: The value of your investment after the investment duration.
- Number of Years: The investment period in years.
Why Use CAGR in Financial Planning?
- Measures real annual growth over time while factoring compounding.
- Helps compare the performance of different investments objectively.
- Simplifies complex growth into a single annual percentage.
- Useful for analyzing equity returns, SIPs, mutual funds, and business growth.
Limitations of CAGR
CAGR assumes a steady growth rate and ignores volatility. While it provides a smoothed average, it doesn't reflect year-to-year performance or risks. Use it in combination with other financial metrics for more informed decisions.
When Should You Use a CAGR Calculator?
- To evaluate long-term mutual fund or stock performance.
- To compare investment returns between different assets.
- To assess how your portfolio has performed annually.
- To forecast future returns using past performance.