CAGR (Compound Annual Growth Rate) is the rate at which an investment would have grown if it grew at a steady rate compounded annually. It smooths out volatility to show the effective annualised return over a period.

What is the CAGR formula?

CAGR = (Final Value / Initial Value)^(1/Years) − 1. For example, if ₹1,00,000 grew to ₹2,00,000 in 6 years, CAGR = (2/1)^(1/6) − 1 = 12.25%.

What is a good CAGR for investments?

For Indian equity mutual funds, a 12–15% CAGR over 10+ years is considered good. Nifty 50 h delivered around 12–14% CAGR over 20 years. FDs offer 6–8% CAGR and PPF offers 7.1%.

How is CAGR different from absolute return?

Absolute return is the total % gain without considering time. CAGR normalises for time. A 100% absolute return in 1 year is a 100% CAGR; the same 100% return in 10 years is only a 7.18% CAGR — very different.

What is the Rule of 72?

The Rule of 72 is a quick way to estimate doubling time: divide 72 by the CAGR (%). At 12% CAGR, money doubles in ~6 years (72/12). This calculator gives the exact value, but Rule of 72 is useful for mental math.

CAGR Calculator

⚠️ Not financial advice. Results are illustrative only and should not be used as the basis for any investment, tax, or financial decision. Consult a qualified financial adviser or chartered accountant before acting on any figure shown.

Why CAGR matters for investors

Raw returns can be misleading. If your mutual fund portfolio went from ₹5L to ₹12L in 8 years, the 140% absolute return sounds impressive — but the CAGR is 11.5%, which puts it in context against a benchmark or alternative investment.

CAGR is the standard metric for comparing investments across different time periods. Fund factsheets, stock screeners, and investment reports all use it.

Three modes in this calculator

Find CAGR — you know the starting value, ending value, and time; want to know the annualised return.
Find Future Value — you know your investment, expected CAGR, and time horizon; want to project the final corpus.
Find Years— you know your starting value, target value, and expected CAGR; want to know when you'll reach the goal.

CAGR vs XIRR

CAGR assumes a single lump-sum investment with no interim cash flows. For SIPs (regular investments), XIRR is more accurate as it accounts for the timing and size of each investment. Most mutual fund apps show XIRR for SIP returns and CAGR for lump-sum investments.

Common use cases for CAGR calculation

Investors compare the historical CAGR of different mutual fund schemes over 3, 5, and 10-year periods before making allocation decisions — a fund with 14% CAGR over 10 years consistently outperforms one with 12%, which on ₹10 lakh means a ₹4.5 lakh difference in the final corpus. Business analysts calculate revenue CAGR to present growth trends to investors or in board presentations. Startup founders use projected CAGR in pitch decks to model user or revenue growth. Finance students use it as a fundamental concept in valuation and financial modelling exercises.

Historical CAGR benchmarks for Indian investments

Nifty 50 has historically delivered approximately 12–14% CAGR over rolling 10-year periods, making it the most-cited equity benchmark. Gold in INR terms has delivered around 10–12% CAGR over the past two decades. Real estate in major Indian cities has averaged 7–10% CAGR depending on location and period. PPF delivers 7.1% CAGR (tax-free). Bank FDs typically offer 6–8% CAGR but are taxed as income. The Rule of 72 makes these easy to compare: at 12% CAGR, money doubles in 6 years; at 7%, it takes 10 years.

CAGR limitations to understand

CAGR shows the smoothed annualised return, which can obscure significant volatility. A fund with 20% CAGR over 5 years might have returned −40%, +80%, +15%, −10%, +45% in individual years — the CAGR makes the ride look smoother than it was. It also ignores the impact of regular cash flows, which is why XIRR is used for SIPs. When comparing two investments on CAGR, ensure the time periods are the same — a fund with 20% CAGR over 3 years and another with 15% over 10 years cannot be directly compared without additional context.