Formula used
CAGR = ((End Value / Start Value) ^ (1 / Years)) − 1. It represents the smoothed annual growth rate that would take the start value to the end value over the given period, assuming reinvestment and constant compounding. It does not reflect volatility or interim drawdowns.
Example calculation
Rs 1,00,000 growing to Rs 2,00,000 in 5 years gives CAGR = (2,00,000/1,00,000)^(1/5) − 1 = 2^0.2 − 1 = 14.87% per year. Absolute return = 100%. The CAGR is the useful annualised figure for comparison.
How to use this calculator
- Enter the initial investment value (what you paid or the starting NAV/price).
- Enter the final value (current value or selling price).
- Set the number of years the investment was held.
- Read your CAGR, absolute return percentage and total gain.
Important assumptions
- Single lump-sum investment — CAGR is not suitable for SIP or multiple investments; use XIRR for those.
- No intermediate cash flows (dividends reinvested or partial redemptions affect the actual return).
- Educational estimate only. Actual mutual fund CAGR includes expense ratio; compare net-of-expenses figures.
Common mistakes to avoid
- Comparing absolute returns across different time periods instead of CAGR.
- Using CAGR for SIP investments — use XIRR instead.
- Ignoring dividends or distributions that came out of the investment before the final value.
- Mixing up the start and end values, which gives an incorrect (inflated or negative) result.
Why CAGR matters for Indian investors
Indian mutual fund factsheets, stock screeners and insurance brochures quote returns as CAGR (or annualised returns) to allow fair comparison. A fund returning 14.87% CAGR doubles your money in 5 years; one returning 7.2% CAGR doubles it in 10 years. Understanding CAGR helps you evaluate if your portfolio is outperforming or underperforming benchmarks.
- SEBI mandates mutual fund performance disclosures in CAGR for periods longer than 1 year.
- The Nifty 50 has delivered approximately 12% CAGR over the last 20 years.
- PPF at 7.1% doubles money in approximately 10 years (CAGR = 7.1%).
CAGR vs XIRR — which to use?
CAGR is ideal for a single lump-sum investment or for comparing two funds over the same period. XIRR (Extended Internal Rate of Return) is the right metric for SIP investments, where you invest different amounts at different dates. Most mutual fund apps in India show XIRR for SIP portfolios and CAGR for lump-sum investments.
- Single lump-sum → use CAGR.
- Monthly SIP or multiple cash flows → use XIRR.
- Fund comparison over same period → CAGR is fine.
Source and Methodology
This calculator computes CAGR using the standard formula: (End Value / Start Value)^(1/Years) − 1. Absolute return is (End − Start) / Start × 100%. Both calculations assume no intermediate cash flows.