How this calculator works
CAGR (Compound Annual Growth Rate) answers a simple question: if your investment had grown at one steady, compounding rate every year — instead of the messy up-and-down path it actually took — what would that rate have to be to get from your starting value to your ending value?
The formula:
CAGR (%) = [(Ending value ÷ Starting value)(1 ÷ years) − 1] × 100
Enter your starting value, ending value, and the number of years between them, and the calculator does the rest instantly.
Worked example
An investment grows from ₹1,00,000 to ₹2,00,000 over 5 years. CAGR = [(2,00,000 ÷ 1,00,000)(1/5) − 1] × 100 = 14.87%. That's the single steady annual rate that would double your money over 5 years.
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Talk to a CA →What is CAGR?
CAGR stands for Compound Annual Growth Rate — the smoothed annual rate that would take an investment from its starting value to its ending value over a given period, assuming steady compounding each year.
How is CAGR different from average annual return?
CAGR accounts for compounding, a simple average doesn't. A simple average just adds up each year's return and divides by the number of years, ignoring how gains and losses compound on each other. CAGR is usually the more accurate measure for multi-year growth.
Can CAGR be negative?
Yes — if the ending value is lower than the starting value, CAGR comes out negative, reflecting an average annual decline over the period.
Is CAGR the same as actual year-by-year returns?
No — CAGR smooths out volatility into a single steady rate. The actual year-by-year returns could have swung up and down significantly even while producing the same overall CAGR.
This tool is for quick estimation only and is not a substitute for professional financial or tax advice. For your specific situation, consult a qualified advisor or CA.
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