CAGR Calculator

How to Use the Calculator – Step-by-Step

1. Enter Final Value

Input the investment’s value at the end of the period.

2. Enter Initial Value

Input the value when the investment began.

3. Enter Duration

Specify the number of years the investment was held.

4. Click ‘Calculate’

You’ll instantly get your CAGR, expressed as a percentage.

Tip: CAGR does not account for market volatility or interim returns—it’s an average over the full period.

Understanding CAGR

CAGR (Compound Annual Growth Rate) is the rate at which your investment would have grown if it had grown at the same rate every year. It’s a valuable metric for smoothing out year-to-year fluctuations in returns.

Why it matters:

• It accounts for compounding.
• It standardizes comparison across different investment durations.
• It helps investors understand long-term performance without being misled by short-term volatility.

CAGR Benchmarks by Investment Type

Note: These ranges are historical estimates and vary based on market conditions, geography, and policy.

Practical Example

Scenario:

You invested ₹2,00,000 in a mutual fund, and it grew to ₹3,10,000 in 5 years.

Calculation:

CAGR = (3,10,000÷2,00,000)(1÷5)(3,10,000 ÷ 2,00,000) ^ (1 ÷ 5)(3,10,000÷2,00,000)(1÷5) – 1 = 9.14%

Interpretation:

Your mutual fund investment grew at an average rate of 9.14% annually over five years.

Tips to Maximize Long-Term CAGR

• Start Early
  The longer your investment horizon, the more time compounding has to work.
• Reinvest Profits
  Reinvesting returns can significantly boost CAGR over time.
• Stay Consistent
  Avoid panic selling and short-term speculation—CAGR rewards long-term discipline.
• Diversify Investments
  Balanced portfolios tend to yield more stable CAGR outcomes.
• Track Performance Regularly
  Monitoring helps rebalance and reallocate underperforming assets.
• Avoid High Fees
  Excessive management fees can erode returns and reduce your effective annualized return on investment (CAGR).
• Invest During Dips
  Market corrections can be a great entry point for long-term gains.
• Focus on Tax Efficiency
  Consider post-tax returns when evaluating CAGR, especially for long-term capital gains.