What is CAGR and how is it calculated?

CAGR (Compound Annual Growth Rate) is the annualised growth rate of an investment from its initial to final value, assuming annual compounding. CAGR Formula: CAGR = (Final Value ÷ Initial Value)^(1 ÷ Years) − 1. Example: ₹1 Lakh growing to ₹5 Lakh in 10 years = CAGR of 17.46% p.a.

What is a good CAGR for a mutual fund in India?

A CAGR of 12–15% is considered good for Indian equity mutual funds over 10+ years. Large-cap index funds typically deliver 10–12% CAGR. Mid and small-cap funds have historically achieved 14–18% CAGR over 10+ years. Anything consistently above 15% over 10 years is exceptional. For debt funds or FDs, 6–8% CAGR is considered decent.

What is the difference between CAGR and absolute return?

Absolute return = (Final − Initial) ÷ Initial × 100. It shows total gain with no time context. CAGR is the annualised version. Example: ₹1 Lakh → ₹2 Lakh in 5 years = 100% absolute return but only 14.87% CAGR p.a. Always use CAGR when comparing investments of different durations.

Can CAGR be used for SIP returns?

No — CAGR is only accurate for lump sum investments (single cash flow). For SIPs, the correct metric is XIRR (Extended Internal Rate of Return), which accounts for the timing of each monthly investment. Our CAGR calculator supports a combined lump sum + monthly SIP mode that computes the effective rate of return using IRR methodology.

What is the Rule of 72?

The Rule of 72 is a quick mental shortcut: divide 72 by the CAGR % to estimate how many years your investment takes to double. At 12% CAGR → 6 years. At 8% CAGR → 9 years. At 18% CAGR → 4 years. Our CAGR calculator shows this automatically below the result.

Can CAGR be negative?

Yes. If your investment lost value (Final Value < Initial Investment), the CAGR will be negative, indicating an average annual loss. For example, ₹1 Lakh falling to ₹70,000 over 5 years gives a CAGR of approximately −6.7% p.a.

Is CAGR the same as the average annual return?

No. CAGR is a compounded annualised return — it accounts for the effect of compounding (earning returns on returns). A simple average of yearly returns can be misleading because it does not account for compounding. CAGR gives a more accurate picture of real investment performance over time.

How is CAGR different from XIRR?

CAGR works for a single lump sum investment with one start and one end value. XIRR (Extended Internal Rate of Return) handles multiple cash flows at irregular intervals — perfect for SIPs or investments with top-ups. Most mutual fund apps (Groww, Zerodha, ET Money) use XIRR for SIP performance tracking.

SIP SWP CAGR Goal Lumpsum

CAGR Calculator

Q: Is CAGR the same as the average annual return?

No. CAGR is a compounded annualised return — it accounts for the effect of compounding (earning returns on returns). A simple average of yearly returns can be misleading because it does not account for compounding. CAGR gives a more accurate picture of real investment performance over time.

Q: How is CAGR different from XIRR?

CAGR works for a single lump sum investment with one start and one end value. XIRR (Extended Internal Rate of Return) handles multiple cash flows at irregular intervals — perfect for SIPs or investments with top-ups. Most mutual fund apps (Groww, Zerodha, ET Money) use XIRR for SIP performance tracking.

Enter your initial investment, final value, and duration to instantly calculate your Compound Annual Growth Rate.

Initial Investment (Lump Sum)

₹

₹1 Lakh

Monthly SIP Amount (optional)

₹

₹0

Final Portfolio Value

₹

₹5 Lakh

Duration

Rule of 72 — Quick Doubling Check

At 17.46% CAGR, your money doubles every 4.1 years.

Also try:

SIP + Step-Up Calculator — grow wealth month by month Time to Goal SIP Calculator — how long to reach ₹1 Crore?

CAGR

17.46%p.a.

Final Value₹5,00,000₹5 Lakh

Initial Investment

Gains Earned

Gain (400%)

+₹4,00,000

₹4 Lakh

Invested

₹1,00,000

₹1 Lakh

Duration

10 Yr

120 months

Year-by-Year Growth at 17.46% Effective Rate

How ₹1,00,000 (₹1 Lakh) compounds to ₹5,00,000 (₹5 Lakh) over 10 years

Year	Total Invested	Gain Earned	Portfolio Value
Start	₹1,00,000 ₹1 Lakh	—	₹1,00,000 ₹1 Lakh
Year 1	₹1,00,000 ₹1 Lakh	+₹18,929 ₹18.93 Thousand	₹1,18,929 ₹1.19 Lakh
Year 2	₹1,00,000 ₹1 Lakh	+₹41,442 ₹41.44 Thousand	₹1,41,442 ₹1.41 Lakh
Year 3	₹1,00,000 ₹1 Lakh	+₹68,217 ₹68.22 Thousand	₹1,68,217 ₹1.68 Lakh
Year 4	₹1,00,000 ₹1 Lakh	+₹1,00,059 ₹1 Lakh	₹2,00,059 ₹2 Lakh
Year 5	₹1,00,000 ₹1 Lakh	+₹1,37,929 ₹1.38 Lakh	₹2,37,929 ₹2.38 Lakh
Year 6	₹1,00,000 ₹1 Lakh	+₹1,82,968 ₹1.83 Lakh	₹2,82,968 ₹2.83 Lakh
Year 7	₹1,00,000 ₹1 Lakh	+₹2,36,532 ₹2.37 Lakh	₹3,36,532 ₹3.37 Lakh
Year 8	₹1,00,000 ₹1 Lakh	+₹3,00,236 ₹3 Lakh	₹4,00,236 ₹4 Lakh
Year 9	₹1,00,000 ₹1 Lakh	+₹3,75,999 ₹3.76 Lakh	₹4,75,999 ₹4.76 Lakh
Year 10Final	₹1,00,000 ₹1 Lakh	+₹4,66,103 ₹4.66 Lakh	₹5,66,103 ₹5.66 Lakh

⚠️ This table assumes a constant 17.46% CAGR. Actual investment returns vary yearly.

How to Use This Calculator

Enter Initial Investment

The amount you originally invested — this is the starting value. Range: ₹1 to ₹10 Crore.

Enter Final Value

The current or ending value of that investment. Must be greater than ₹0.

Set the Duration

How many years the investment was held. Supports 1 to 100 years for long-horizon planning.

Read the CAGR

The result shows your annualised growth rate (CAGR %). Green = strong (≥15%), Purple = healthy (8–15%), Amber = moderate (<8%).

Check the Pie Chart

The doughnut chart shows what portion of your final value was original investment vs. gains earned.

Review Year-by-Year Table

See exactly how the investment compounds each year at the calculated CAGR rate.

Frequently Asked Questions

CAGR Formula & Worked Example

The Formula

CAGR = (FV ÷ PV) ^ (1 ÷ n) − 1

FV = Final Value (ending portfolio value)

PV = Present Value (initial investment)

n = Number of years

Worked Example

Initial Investment (PV)₹1,00,000

Final Value (FV)₹5,00,000

Duration (n)10 years

CAGR(5÷1)^(1/10) − 1 = 17.46%

CAGR vs Absolute Return — Quick Reference

Investment	Absolute Return	CAGR
₹1L → ₹2L in 5 yrs	100%	14.87%
₹1L → ₹2L in 10 yrs	100%	7.18%
₹1L → ₹5L in 10 yrs	400%	17.46%
₹1L → ₹10L in 15 yrs	900%	16.60%

Same absolute return but very different CAGR — duration matters.