CAGR Calculator
Calculate the exact annual smoothed compounding rate (CAGR) of any investment across any holding tenure.
How CAGR is Calculated & Why It Outperforms Absolute Return
CAGR (Compound Annual Growth Rate) is the standard metric used worldwide to measure annualized return across multi-year holding periods. Absolute return can be misleading: gaining 100% over 2 years is extraordinary, whereas gaining 100% over 15 years yields a modest ~4.7% CAGR.
The Standard CAGR Mathematical Equation:
CAGR smoothes out the inevitable year-to-year swings of volatile markets, showing you the steady annual rate that would take your money from the initial balance to the final value.
Frequently Asked Questions
Clear answers to common questions on formulas, taxation, and investing strategy.
Q1. What is the difference between CAGR and Absolute Return?
Absolute return simply measures total percentage gain without accounting for time elapsed. CAGR factors in the exact number of years, providing an annualized rate of return that enables fair comparison across different assets.
Q2. Can I use CAGR to evaluate monthly SIP returns?
No. CAGR assumes a single one-time investment made at the start. For periodic recurring cash flows like monthly SIPs, you must use XIRR (Extended Internal Rate of Return), which weights every monthly installment by its unique holding time.
Q3. What is considered a healthy CAGR in Indian mutual funds?
Historically, Indian large-cap index funds have delivered 12%–13% CAGR over 10+ year periods, while quality flexi-cap and mid-cap funds have generated 14%–17% CAGR.
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Compare your investment CAGR against real inflation.
Turn Calculations into Real Financial Freedom
Calculators provide mathematical estimates, but consistent wealth creation requires choosing the right high-performing diversified schemes, tracking annual alpha, and disciplined rebalancing.