CAGR (Compound Annual Growth Rate) is the single yearly rate that would take an investment from its starting value to its ending value. It lets you compare a stock, a fund and a fixed deposit on the same scale.
How the CAGR calculator works
The formula is:
CAGR = (Ending value ÷ Starting value)1 ÷ years − 1
₹1,00,000 growing to ₹2,50,000 in 5 years is a 150% absolute return, but the CAGR is about 20.11% a year. CAGR smooths the path, so it hides how bumpy the individual years were.
Frequently asked questions
CAGR or absolute return: which one should I use?
Use absolute return for periods under a year and CAGR for longer periods, because CAGR accounts for time.
When should I use XIRR instead?
Use XIRR when money goes in or out at different dates, such as a SIP. CAGR only works for one starting amount and one ending amount.
Can CAGR be negative?
Yes. If the ending value is lower than the starting value, CAGR is negative.
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This calculator is for education and illustration. Results are estimates based on the numbers you enter and are not a prediction, guarantee or investment advice.