CAGR calculator

Turn a total return into an annual rate, so investments held for different lengths of time can be compared on the same scale.

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Calculate the annual growth rate

What CAGR actually tells you

CAGR is the single annual rate that, applied year after year, would have taken the starting value to the ending value. It is a smoothing device. An investment that went up 80% and then down 30% has the same CAGR as one that crept up steadily to the same place, and the two are not remotely the same experience to hold.

Its usefulness is comparison. Absolute return — "it doubled" — means nothing without a period attached. Doubling in three years and doubling in fifteen are wildly different outcomes, and CAGR is what puts them on the same scale: 26% a year against 4.7% a year.

CAGR against absolute return

The result above shows both. Absolute return is simply how much more you ended with, as a percentage. CAGR converts that into a per-year figure by taking the n-th root. The formula is (End ÷ Start)^1/n − 1, where n is the number of years.

Where it misleads

CAGR hides volatility entirely, so two investments with identical CAGR can carry completely different risk. It also assumes a single deposit and a single withdrawal — if you added money along the way, CAGR is the wrong measure and you want XIRR instead. And over very short periods it exaggerates: a 20% gain in three months annualises to something enormous that nobody should expect to continue.

This is a calculator, not financial advice. It shows what the arithmetic produces from the numbers you type. Rates, charges and tax treatment change, and your own circumstances decide whether a product suits you. Confirm the figures with the bank or provider before you commit.

Frequently asked questions

What is a good CAGR?

It depends entirely on what you are comparing against. For Indian equity over long periods, low double digits is a reasonable benchmark; for a fixed deposit, matching inflation is the realistic bar. A CAGR is only meaningful next to an alternative you could actually have chosen.

Can CAGR be negative?

Yes. If the final value is lower than the initial value, the CAGR is negative and tells you the annual rate at which the investment shrank.

What is the difference between CAGR and XIRR?

CAGR assumes one investment at the start and one value at the end. XIRR handles money going in and out at irregular dates, which is what actually happens with a SIP or a portfolio you keep adding to. For anything with multiple contributions, XIRR is the right measure.

Does CAGR account for dividends?

Only if you include them. If dividends were paid out rather than reinvested, add them to the final value to get the total return, or the CAGR will understate what you actually earned.

Can I use CAGR for periods shorter than a year?

You can enter a fractional period, but be careful reading the result. Annualising a few months of performance produces a number that looks impressive and predicts nothing.