A CAGR calculator turns a starting value, an ending value and a holding period into one clean number: the compound annual growth rate — the steady yearly return that would have taken your investment from where it began to where it ended. It's the fairest way to compare investments held for different lengths of time, because it strips out how long you held and leaves only the per-year performance.
Your investment
Enter what you put in, what it became, and how long
years
months
days
Add months and days for precision — CAGR is sensitive to the exact period, especially under a year.
Compound annual growth rate
0%
per year, compounded
Total (absolute) return
0%
over the whole period
Your gain
₹0
final minus initial
| If held for | Same CAGR gives |
|---|
How CAGR is calculated
The formula is straightforward: CAGR = (Final ÷ Initial)(1 ÷ years) − 1. You divide the ending value by the starting value to get the total growth multiple, take the root that matches your number of years, and subtract one to express it as a yearly rate. The result is the constant annual return that, compounded each year, would bridge your start and end values.
CAGR vs absolute return — why both matter
Absolute return tells you how much you made in total: a ₹1 lakh investment becoming ₹2 lakh is a 100% absolute return, whether that took two years or twenty. CAGR answers a different question — how hard your money worked per year. The same 100% gain is a punchy 41% CAGR over two years, but a sleepy 3.5% over twenty. Absolute return flatters long holds; CAGR makes them honest.
The short-period trap
Annualising a gain made over a few months can produce an enormous, misleading CAGR — a 30% gain in three months annualises to over 180%, which no one should expect to repeat. CAGR is most meaningful over periods of a year or more. Treat any sky-high figure from a short holding as a quirk of the math, not a forecast.
Where you'll use it
- Comparing funds or stocks held for different durations on a level footing.
- Checking a SIP-free lump sum — for recurring investments, use an XIRR-based tool instead, since CAGR assumes a single entry and exit.
- Sanity-checking marketing claims — a "doubled your money" headline means little without the holding period CAGR reveals.
For more on how compounding works over time, the AMFI investor education resources are a reliable reference.