What is the CAGR Calculator?
The CAGR (Compound Annual Growth Rate) Calculator converts one beginning value, one ending value and a time period into a constant annualised rate. It does not show the path between those values, account for intervening cash flows or identify a suitable comparison.
For a point-to-point investment, CAGR converts the entered beginning value, ending value and period into one annualised mathematical rate. It does not identify a suitable product or predict future performance.
Use CAGR only for a point-to-point result with no additions or withdrawals during the period.
How does it work?
The core CAGR formula is straightforward: CAGR = (Ending Value / Beginning Value)^(1/n) – 1, where n is the number of years. For example, if you invested ₹1,00,000 and it grew to ₹2,00,000 over 5 years, the CAGR is (2,00,000 / 1,00,000)^(1/5) – 1 = 2^0.2 – 1 ≈ 14.87% per annum. This single number tells you the constant annual rate at which your money would have had to grow to reach that ending value — it does not tell you what happened in between, but it gives you the best single-figure summary of long-term performance.
The three inputs to the calculator are: Beginning Value (your initial investment or the value at the start of the measurement period), Ending Value (the current or final corpus value), and Time Period in years (decimals are accepted — e.g., 2.5 years for a 30-month investment). For lump-sum investments like a fixed deposit, an NPS Tier-II allocation, or a direct equity purchase, these three numbers are all you need. It is important to use the actual invested amount as the beginning value, not including any top-ups made along the way, as those would require an XIRR calculation instead of simple CAGR.
CAGR differs from XIRR, which handles irregular or periodic cash flows. Use CAGR for one beginning value and one ending value; use an appropriate cash-flow return method where money was added or withdrawn during the period.
Worked example
A beginning value of ₹5,00,000 and ending value of ₹11,40,000 over six years produces a CAGR of about 14.74%. That is the annualised rate for those entered values only; it is not a future-return assumption or product comparison.
When to use this calculator
- 1Annualising one beginning value and one ending value over a known period.
- 2Comparing point-to-point rates only when the periods, cash-flow structure and units are consistent.
- 3Checking the annualised change in an asset value without treating it as a future-return forecast.
Common mistakes to avoid
- ✕Using CAGR when money was added or withdrawn during the period.
- ✕Treating a smooth annualised rate as the actual year-by-year return path.
- ✕Comparing rates measured over different periods or before different costs and taxes.
- ✕Using a historical CAGR as a future-return assumption.
Frequently asked questions
- Does this calculator define a good CAGR?
- No. It annualises the values entered. Interpretation depends on the asset, dates, cash flows, risk, costs and an appropriate comparison benchmark.
- Is CAGR appropriate for SIP investments?
- Not when there are multiple contribution dates. Use a cash-flow-aware return measure for periodic or irregular contributions.
- How does CAGR relate to account interest rates?
- CAGR annualises observed beginning and ending values. An account's declared rates, contribution dates and crediting rules can produce a different realized result.
- Can CAGR be negative?
- Yes. If the ending value is below the beginning value, the annualised point-to-point rate is negative.
- Can CAGR be used for an NPS statement?
- Only for a true point-to-point value with no intervening cash flows. Regular contributions require a cash-flow-aware return measure. Current NPS exit and tax rules are outside this calculator.