CAGR Calculator 2026 | Compound Annual Growth Rate

CAGR (Compound Annual Growth Rate) tells you the average yearly return of an investment over a period of time, assuming returns are reinvested. Enter your starting value, ending value, and number of years — it gives you the single annual rate that would produce that result. It flattens out the ups and downs so you can compare investments side by side, regardless of how volatile each one was.

CAGR eliminates year-to-year noise and gives you one number to compare performance. If Fund A shows a 5-year CAGR of 12% and Fund B shows 8%, Fund A outperformed — regardless of what happened in each individual year. Use it for stocks, mutual funds, real estate, business revenue, or any number that grows over time.

Absolute return is the total gain: 'My investment grew 50% over 5 years.' CAGR is the annualized rate: that same 50% over 5 years = ~8.45% CAGR. A 50% return over 3 years (14.5% CAGR) is much better than 50% over 10 years (4.1% CAGR). When comparing investments held for different lengths of time, CAGR is the number that matters — absolute return ignores time entirely.

CAGR = (Ending Value / Beginning Value)^(1/n) − 1, where n = number of years. Example: ₹1,00,000 grew to ₹1,50,000 over 3 years. CAGR = (1,50,000/1,00,000)^(1/3) − 1 = (1.5)^(0.333) − 1 = 14.5%. The calculator handles the math — just enter your numbers.

The number is mathematically correct. What it hides is everything else. Two investments can both have 10% CAGR — one could be a smooth government bond, the other a tech stock that dropped 40% then recovered. CAGR alone tells you nothing about risk, volatility, or how the investment actually behaved year to year. Use it for comparison, not as your only metric.

Historical benchmarks: global stocks ~7-10% CAGR long-term. Indian equity (Sensex/Nifty) ~14-16% over very long periods. US S&P 500 ~10%. Fixed deposits 6-8%. Real estate roughly inflation + 2-4%. A 'good' CAGR depends on your risk tolerance — 15% is great for an aggressive investor, 8% is fine for someone protecting capital. Chasing the highest CAGR without understanding risk is how people lose money.

No. CAGR is backward-looking — it tells you what happened, not what will happen. A fund with 15% CAGR over 5 years might deliver 2% over the next 5. Past returns don't predict future results, and high historical CAGR often creates overconfidence. Use CAGR to evaluate past performance, not to forecast.

Compare 3-year, 5-year, and 10-year CAGRs — a fund with consistently high CAGR across all timeframes signals good management. Compare within the same category only (large-cap vs large-cap, not large-cap vs small-cap). Also check against the benchmark: a fund with 12% CAGR when its index delivered 14% underperformed. CAGR is one metric — expense ratios, manager track record, and risk metrics matter equally.

XIRR handles multiple cash flows — irregular investments and withdrawals. CAGR assumes a single lump-sum investment with no additions or redemptions. If you invest monthly via SIP, CAGR will give you a misleading number; XIRR is the correct metric. Use CAGR for one-time investments. Use XIRR when you add or withdraw money at different times.

No — standard CAGR is nominal. 10% nominal CAGR with 6% inflation = ~3.8% real return. For long-term planning, calculate both. Real CAGR ≈ (1 + nominal CAGR)/(1 + inflation rate) − 1. Ignoring inflation makes every investment look better than it actually is.

Capital gains taxes reduce effective CAGR — often by 1-3% annually depending on your country and holding period. In India: long-term capital gains above ₹1 lakh taxed at 10%, short-term at 15%. USA: 0-20% long-term plus state taxes. UK: 10-20%. UAE: no capital gains tax. After-tax CAGR = CAGR × (1 − effective tax rate), roughly. Always check your local rules — tax treatment changes the real outcome significantly.

At least 3-5 years for meaningful comparisons. 1-2 year CAGRs are dominated by market timing and temporary swings. 10+ year CAGRs give better insight because they span multiple market cycles. Check multiple timeframes (3, 5, 10 years) — cherry-picking the best-looking short-term number is how investors fool themselves.

CAGR uses compounding — average annual return is simple arithmetic. Returns of +20%, −10%, +25%, −5%, +15% over 5 years: arithmetic average = 9%. CAGR = [(1.2 × 0.9 × 1.25 × 0.95 × 1.15)^(1/5)] − 1 = ~7.8%. CAGR is always lower when returns are volatile because it accounts for the compounding drag from losses. CAGR reflects what actually happened to your money.

Yes — if your investment lost value. ₹1,00,000 becoming ₹90,000 over 2 years = −5.13% CAGR. Negative CAGR happens in bear markets, poor fund picks, or economic downturns. It's more common in short-term calculations. Accepting occasional negative periods is part of investing — focus on the long-term CAGR across market cycles, not avoiding every down year.

Yes — CAGR applies to any metric that grows: revenue, customer count, profit margins, market share. A company growing revenue from ₹10 crore to ₹15 crore over 3 years has 14.5% revenue CAGR. It's the standard way to compare growth rates across companies of different sizes. For business use, pair CAGR with year-over-year growth to see both the trend and the annual variation.

CAGR doesn't show you: volatility (how bumpy the ride was), the order of returns (when the bad years happened), the impact of adding or withdrawing money mid-way, or what happens next. It can be manipulated by picking favorable start and end dates. Always pair CAGR with: maximum drawdown, standard deviation, and a look at what actually happened in the middle years, not just the endpoints.