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CAGR Calculator

Compound annual growth rate of any investment.

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Verdict

Compound Annual Growth Rate

20.11%

Absolute return: 150.0% over 5 years.

Absolute Return

150.0%

Annualised (CAGR)

20.11%

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Next Up Calculators

SWP

Retirement income simulation.

DRIP

Stock appreciation + dividend compounding.

ETF

Tracking-error & expense-ratio adjusted.

VIX Move

1σ option boundary calculator.

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CAGR — The True Yardstick of Investment Performance

Compound Annual Growth Rate (CAGR) smoothes the volatile annual returns of an asset into the single rate that, if compounded yearly, would have produced the observed end value. It is the only fair way to compare two investments of different durations.

Formula

CAGR = (FV / PV)^(1/n) − 1

Caveats

  • CAGR hides volatility — a 12% CAGR can come from a smooth ride or a 50% drawdown followed by recovery.
  • For lumpy cash-flows, use XIRR instead.
  • Compare against an appropriate benchmark (Nifty TRI, debt index) — raw CAGR alone is meaningless.

Frequently Asked Questions

How is CAGR calculated?

CAGR = (Ending Value / Starting Value)^(1/years) − 1, expressed as a percentage. It is the smoothed annual return that would take your starting investment to its ending value if it grew at a constant rate.

What is the difference between CAGR and absolute return?

Absolute return shows total growth without considering time. CAGR annualises that growth, making it comparable across investments of different durations. Always use CAGR — not absolute return — to compare two investments.

Is 15% CAGR realistic in Indian equities?

Yes for selected mid-cap and small-cap funds over 10+ years, but 12-13% is more realistic for diversified large-cap funds. Beware of marketing materials quoting 20%+ CAGR — they usually cherry-pick a bull-market starting point.

Does CAGR account for volatility?

No — CAGR only measures start-to-end growth. Two investments can have the same CAGR with vastly different volatility. Always pair CAGR with standard deviation or maximum drawdown when comparing investment options.

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