Tool

CAGR Calculator

Two investments both doubled your money — one took four years, the other eleven. CAGR, the compound annual growth rate, is the single steady yearly rate that would have carried the starting amount to the ending amount, and it is the only honest way to compare the two.

Enter any three of starting value, ending value, years and growth rate; this solves for the fourth and puts the answer next to the Nifty 50, gold, PPF, FDs and inflation. Hover the ? on any field if you're unsure what to enter. The full explanation is below — a good CAGR still hides every bad year you had to sit through.

Solve for

Starting Value (₹) ? What the investment was worth on day one — the lump sum you put in, or its value on the date you want to measure from.

Ending Value (₹) ? What it is worth at the end. For a mutual fund, today’s value of that folio; for a property, what it would sell for.

Years ? How many years passed between those two values. Decimals are fine — 18 months is 1.5.

CAGR

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Total Gain

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Absolute Return ? Total growth over the whole stretch, ignoring how long it took. ₹1 lakh becoming ₹3.2 lakh is 220% whether that took three years or thirty.

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Doubles Every ? How long the money takes to double at this rate — 72 divided by the rate, the old Rule of 72. At 12% a year, about six years.

How does your CAGR compare?

Asset	Approx. CAGR	₹1L → 10 yrs	Source
Nifty 50 (since 1996)	~13%	₹3.4 L	NSE
Sensex (since 1979)	~15%	₹4.0 L	BSE
Gold (INR, 10-yr)	~11%	₹2.8 L	MCX / WGC
PPF (current rate)	7.1%	₹2.0 L	GoI
Bank FD (avg SBI 3-yr)	~7%	₹2.0 L	RBI / SBI
CPI Inflation (10-yr avg)	~5.5%	₹1.7 L	MoSPI

Historical returns are approximate and do not guarantee future performance. Equity returns are pre-tax and include price returns only (not dividends). Gold is MCX spot. PPF rate as of 2025–26.

What is CAGR?

CAGR — Compound Annual Growth Rate — is the rate at which an investment would need to grow each year to go from its starting value to its ending value over a specified period, assuming compounding. It's the single number that answers: "What consistent annual return did this investment deliver?"

CAGR smooths out year-to-year volatility. A mutual fund might return 45% one year and −18% the next. Its CAGR over two years isn't the average of those two numbers — it's the geometric mean: the single annual return rate that gets you from start to end. For the example above: ₹1 lakh → ₹1.45 lakh → ₹1.19 lakh, CAGR = (1.19)^(1/2) − 1 = 9.1%/year, not 13.5%.

The formula

CAGR Formula CAGR = (Ending Value / Starting Value)^1/N − 1

Where: N = number of years

Worked example (default): ₹1,00,000 grows to ₹3,20,000 over 10 years
CAGR = (3,20,000 / 1,00,000)^1/10 − 1 = (3.2)^0.1 − 1
= 1.1233 − 1 = 12.33%/year

Verification: ₹1,00,000 × (1.1233)¹⁰ = ₹3,20,000 ✓

Doubling time at 12.33%: 72 ÷ 12.33 ≈ 5.8 years (Rule of 72)

CAGR vs absolute return vs simple return

These three measures are often confused:

Absolute return (also called "point-to-point return"): how much the investment grew in total, regardless of time. ₹1 lakh → ₹3.2 lakh = 220% absolute return. Useful only when comparing investments of equal duration.
Simple annual return: absolute return ÷ years = 220% ÷ 10 = 22%/year. This is misleading because it ignores the compounding effect — you can't actually earn 22%/year linearly.
CAGR: 12.33%/year in the same example. This is the correct annualised measure for comparing investments of different durations and sizes. It accounts for compounding.

When a mutual fund advertisement says "returned 18% since inception," they mean CAGR. When they say "total returns of 540%," they mean absolute return. Both can be true simultaneously — you need the time period to evaluate either.

The Rule of 72

A quick mental shortcut: divide 72 by the CAGR to find how many years it takes to double your money. At 12% CAGR, money doubles in 72 ÷ 12 = 6 years. At 7% (FD rate), it takes 72 ÷ 7 ≈ 10.3 years. At India's average inflation of ~6%, prices double in 72 ÷ 6 = 12 years. This is why keeping money in a savings account (3–4%) while inflation runs at 6% is a real loss — your money doubles in 18 years but prices double in 12.

Frequently Asked Questions

What's the difference between CAGR and XIRR?

CAGR assumes a single lump-sum investment and a single ending value. XIRR handles irregular cash flows — multiple investments at different dates and multiple redemptions. For a simple FD or a single mutual fund investment, CAGR is correct. For a SIP (monthly investments), CAGR is misleading because each instalment has a different time horizon. Use XIRR for SIPs. Most fund factsheets show CAGR on lump-sum performance; XIRR is what matters for your actual returns.

Why do mutual fund ads show 3-year, 5-year, and 10-year CAGR separately?

Because returns are period-dependent. A fund might show 6% 3-year CAGR (caught in a down market) but 14% 10-year CAGR (includes the recovery). SEBI mandates showing multiple time periods to prevent cherry-picking. When evaluating a fund, the 10-year CAGR is the most meaningful — it captures at least one full market cycle. Anything under 3 years is noise.

What CAGR should I expect from Indian equity?

The Nifty 50 has delivered approximately 13% CAGR since its inception in 1996 (price return, pre-tax). Total returns (including dividends) are slightly higher. However, this includes many periods of 0–5% returns stretched over 5–7 years, followed by strong recoveries. A realistic planning assumption for a diversified equity mutual fund is 10–12% CAGR over 15+ year horizons. For 5–7 year horizons, 8–10% is more appropriate given sequence-of-returns risk.

Can CAGR be negative?

Yes — if the ending value is less than the starting value, CAGR is negative. A stock that went from ₹500 to ₹200 over 5 years has a CAGR of (200/500)^(1/5) − 1 = −16.5%/year. CAGR is undefined if the starting value is zero or negative (you can't divide by zero or take roots of negatives in this context). These edge cases are why XIRR is used for complete financial models.

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