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CAGR Calculator

Calculators · Added 14 August 2026

Compound annual growth rate turns a total change into a per-year figure you can compare against anything else. Enter what an investment was worth at the start, what it is worth now and how long that took, and this calculator returns the CAGR alongside the absolute return — the two numbers that get confused most often.

yrs

Decimals are fine — 3.5 is three and a half years.

How to use the cagr calculator

  1. 1Enter the initial value of the investment.
  2. 2Enter the final value at the end of the period.
  3. 3Enter the period in years. Decimals are fine — 3.5 means three and a half years.
  4. 4Press Calculate to see the CAGR, the absolute return and how many times the original the investment became.
  5. 5Open the smoothed path to see the year-by-year values the rate implies — which is not what actually happened, and the note explains why that matters.

Examples

A doubling over five years

Input
₹1,00,000 growing to ₹2,00,000 over 5 years
Result
CAGR 14.87%, absolute return 100%

The absolute return is 100% and the annual rate is not 20% — compounding means the yearly figure is always lower than the total divided by the years.

A modest long-term holding

Input
₹5,00,000 growing to ₹8,50,000 over 8 years
Result
CAGR 6.86%, absolute return 70%

Seventy percent sounds impressive until it is spread over eight years, which is roughly what a fixed deposit would have paid.

A loss expressed annually

Input
₹2,00,000 falling to ₹1,50,000 over 3 years
Result
CAGR −9.14%, absolute return −25%

CAGR handles declines perfectly well. It is undefined only when a value reaches zero.

About the cagr calculator

Why the annual figure is the comparable one

Total return is almost useless for comparison because it silently embeds the holding period. A friend who tells you their investment is up 80% has told you very little: over three years that is excellent, over fifteen it is a poor result that a deposit account would have beaten with no risk at all.

CAGR removes the period from the comparison by expressing everything as a constant annual rate. Once two investments are stated in those terms they can be placed side by side, and against alternatives — a fixed deposit rate, an index return, inflation. This is the whole reason fund factsheets quote annualised rather than total returns beyond one year, and the reason regulators generally require it.

The formula is (final ÷ initial)^(1/years) − 1. The fractional exponent is doing the work: it asks what constant multiplier, applied once per year for the given number of years, turns the starting value into the ending one.

What CAGR deliberately throws away

CAGR takes two numbers and a duration. Everything that happened in between is discarded by construction, which is both its strength as a comparison tool and its weakness as a description. The smoothed path shown alongside the result is what the rate implies, not what occurred, and on any market-linked investment the two will look nothing alike.

This matters for decisions. Two funds with the same ten-year CAGR may have had entirely different drawdowns along the way, and the one that fell furthest is the one more investors abandoned before the recovery — meaning the published CAGR was earned by fewer of the people who held it. A number that describes the fund does not necessarily describe the investor's outcome.

It also matters for the endpoints themselves. Because CAGR depends only on the first and last values, it is unusually sensitive to when you start and stop measuring. Shifting the start date by a few months across a market peak or trough can move a ten-year CAGR by a percentage point or more, which is why any single annualised figure should be read alongside the period it covers rather than on its own.

Frequently asked questions

What is the difference between CAGR and absolute return?
Absolute return is the total change: final minus initial, over initial. CAGR is the constant yearly rate that would have produced that change through compounding. An investment that doubled has a 100% absolute return regardless of whether it took two years or twenty; the CAGR distinguishes those cases, which is exactly why it is the more useful comparison.
Why is CAGR lower than the absolute return divided by the years?
Because of compounding. A 100% gain over five years is not 20% a year, because each year's growth is applied to a larger base than the last. The correct rate is (2)^(1/5) − 1, or 14.87%. Dividing the total return by the number of years always overstates the annual rate, and the error grows with the period.
Does CAGR tell me how risky the investment was?
No, and this is its main limitation. CAGR only sees the two endpoints. An investment that rose smoothly and one that fell 60% before recovering can have identical CAGRs, and they were not remotely the same experience. Use CAGR to compare outcomes and something else — standard deviation, maximum drawdown — to compare the ride.
Can I use CAGR if I kept adding money?
Not meaningfully. CAGR assumes a single amount left alone, so applying it to a balance built up through regular contributions attributes your own deposits to growth and produces a wildly overstated rate. For a series of investments, the right measure is an internal rate of return, sometimes called XIRR.
Why does the calculator refuse zero or negative values?
Because the formula is undefined there. Taking a fractional root of a negative ratio does not produce a real number, and an investment that reached exactly zero has no finite annual rate that describes it — the loss is total regardless of how long it took.

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