CAGR Calculator

What is CAGR?

Compound Annual Growth Rate (CAGR) is the annualised rate of return that an investment would have needed to grow from its beginning value to its ending value over a given time period, assuming profits were reinvested each year. Unlike simple average returns, CAGR smooths out the volatility of year-to-year growth to give you a single, comparable figure.

The formula is: CAGR = (Ending Value / Beginning Value)^(1/Years) – 1

CAGR vs Absolute Returns

Absolute return simply tells you the total percentage gain or loss. If you invested ₹1,00,000 and got back ₹2,50,000, your absolute return is 150%. But this doesn't tell you when that return was earned. CAGR brings the time dimension in — a 150% return over 5 years is a CAGR of about 20.11%, while over 10 years it's about 9.60%. This makes CAGR ideal for comparing investments held for different durations.

Historical CAGR of Nifty 50

The Nifty 50 index has delivered a CAGR of approximately 11–13% over 20+ year periods, though individual decades have varied widely. From 2003-2023, Nifty 50 delivered roughly a 14% CAGR. Remember, past performance does not guarantee future returns, but long-term equity investing has historically beaten inflation in India.

When to Use CAGR

Use CAGR to evaluate the performance of mutual funds, stocks, real estate, or any investment. It's especially useful when comparing two investments held for different time periods. For ongoing investments like SIPs, consider using our SIP Calculator or Compound Interest Calculator instead.

Limitations of CAGR

CAGR doesn't capture risk or volatility — two investments with the same CAGR could have very different risk profiles. It also assumes a single lump-sum investment and doesn't account for additional contributions or withdrawals. For a more complete picture, pair CAGR analysis with our Lumpsum Calculator.

Frequently Asked Questions