Compound annual growth rate is the constant yearly rate at which an initial value would have to grow to reach the final value over the period. It is a smoothed measure, not a record of actual yearly returns.

What is the CAGR formula?

CAGR = (Final Value ÷ Initial Value)^(1 ÷ number of years) − 1, expressed as a percentage. For example ₹1,00,000 to ₹2,50,000 in 5 years works out to 20.11%.

What is the difference between CAGR and absolute return?

Absolute return is the total percentage change with no reference to time: ₹1,00,000 to ₹2,50,000 is 150%. CAGR converts that into a per-year rate, which makes investments of different durations comparable.

Is CAGR the same as the simple average return?

No. A simple average adds the yearly returns and divides by the number of years, which ignores compounding and volatility. CAGR is almost always lower than the simple average, and it is the more honest figure.

Can CAGR be negative?

Yes. If the final value is lower than the initial value, CAGR is negative and shows the average annual rate of decline.

Can I use CAGR for a SIP?

Not accurately. A SIP invests at many different dates, so each instalment is invested for a different length of time. XIRR handles multiple cash flows; CAGR is designed for a single lump sum.

Why does the calculator require values above zero?

The formula divides by the initial value and takes a root of the result, which is undefined when the initial value, final value or period is zero or negative.

CAGR Calculator

Calculate the compound annual growth rate between any two values, plus absolute growth and total return.

Under 15 seconds

Updated 26 Aug 2026

12,450people used this

CAGR

20.11%

Smoothed annual growth over 5 years.

Total absolute growth

₹1,50,000

150% over the whole period.

Initial value

₹1,00,000

Where the investment started.

Final value

₹2,50,000

2.5× the initial value.

A CAGR calculator finds the annual growth rate that would take an initial value to a final value over a given number of years, using CAGR = (Final ÷ Initial)^(1 ÷ years) − 1. It is a smoothed rate: it does not mean the investment actually grew by that same percentage every single year.

Visual breakdown

A visual view of your calculation.

Interactive charts arrive here soon.

Growth implied by the CAGR

Year-end values if the investment had grown at exactly the CAGR each year. Real returns are rarely this even.

Year-end values if the investment had grown at exactly the CAGR each year. Real returns are rarely this even.
Year	Value	Growth in the year
1	₹1,20,112	₹20,112
2	₹1,44,270	₹24,158
3	₹1,73,286	₹29,016
4	₹2,08,138	₹34,852
5	₹2,50,000	₹41,862

Smart Insights

Generated from the numbers you entered — no guesswork.

₹1,00,000 growing to ₹2,50,000 over 5 years is a CAGR of 20.11%.
That is 150% in total, or 2.5× the money you started with.
The simple average return would read 30% a year, which overstates growth because it ignores compounding.
At this CAGR the value would double roughly every 3.8 years.
CAGR smooths the growth mathematically — the actual year-by-year returns were almost certainly uneven.

How does the CAGR Calculator work?

Each step the calculator runs, in plain language.

1
Divide the final value by the initial value
This gives the growth multiple — how many times the money grew over the whole period.
2
Take the n-th root of that multiple
Raising the multiple to the power of 1 ÷ n converts the total growth into a per-year growth factor.
3
Subtract one and convert to a percentage
Subtracting 1 removes the original capital, leaving just the annual growth rate.
4
Read it as a smoothed rate
CAGR is the constant rate that would produce the same ending value. It says nothing about the path taken.

CAGR Calculator formula

The exact maths behind every number on this page.

CAGR = (Final Value ÷ Initial Value)^(1 ÷ n) − 1

Final Value: Value at the end of the period
Initial Value: Value at the start of the period
n: Number of years, decimals allowed

Multiply by 100 to express the result as a percentage. The formula needs both values above zero and a period above zero.

CAGR Calculator calculation example

₹1,00,000 invested grows to ₹2,50,000 in 5 years.

1Final ÷ Initial2,50,000 ÷ 1,00,000 = 2.5
2Raise to 1 ÷ n2.5^(1 ÷ 5) = 1.2011
3Subtract 11.2011 − 1 = 0.2011
4CAGR20.11% a year

The total return is 150%, but the compound annual growth rate is 20.11% — the steady rate that produces the same end value.

Important assumptions

What this calculation includes, and what it leaves out.

CAGR assumes a single lump sum at the start and a single value at the end, with no cash flows in between.
Growth is treated as perfectly even. Actual year-by-year returns were almost certainly different.
Taxes, transaction costs, expense ratios and dividends taken out are not adjusted for unless you include them in the values you enter.
Both values must be above zero and the period must be above zero for CAGR to be defined.

Benefits

Why people use this calculator before signing a loan.

Compare across time periods
A 3-year and a 7-year investment become comparable once both are expressed as CAGR.
Cut through absolute-return marketing
A headline 150% return over 5 years is a 20.11% CAGR — a very different sounding number.
Sanity-check projections
Enter a target value to see what annual growth rate it would require.

Financial tips

Practical guidance to act on your result.

Use CAGR to compare investments held for different lengths of time.
CAGR hides volatility, so pair it with the worst year you experienced.
For SIPs and other staggered investments, CAGR of the total is misleading — XIRR fits better.
Always compare CAGR after costs and taxes when judging a real return.

Frequently asked questions

Short, direct answers to the questions we hear most.

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Disclaimer

CalPaisa calculators are for general information and planning only. Results are estimates based on the values you enter and standard formulas, and may differ from the figures your bank, employer, or tax authority applies. Nothing here is investment, tax, or legal advice. Please confirm important decisions with a qualified professional. Read our financial disclaimer, learn how CalPaisa works, or tell us about a calculation you think is wrong.

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