CAGR Calculator
Instantly compute the CAGR of your investment with Upstox’s free CAGR Calculator, the simplest way to measure annualised growth over time.
Whether you are evaluating past returns or planning future finances, this tool helps you understand the true yearly growth rate of your investment.
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What Is CAGR?
CAGR (Compound Annual Growth Rate) is the annualised rate at which an investment grows over a specific period. This method works best when profits are reinvested and growth compounds each year. It smoothens volatility and shows a constant rate of return that would take your investment from its beginning value to its ending value.
Unlike simple average returns, CAGR reflects the compounding effect. This makes it one of the most reliable metrics for evaluating long-term investment performance and comparing different financial instruments.
Why Use the CAGR Calculator
The CAGR Calculator helps investors evaluate long-term performance by converting total returns into an annualised growth rate. By effectively using this calculator, you can compare between different asset classes such as stocks, mutual funds, ETFs, fixed deposits or even business revenue growth.
How the CAGR Calculation Works
The CAGR formula is
CAGR = (Ending Value / Beginning Value)^(1 / Number of Years) − 1
To calculate CAGR, you simply enter your initial investment amount, the final value of the investment, and the number of years invested. The calculator then computes the annualised percentage growth rate.
This formula determines the constant rate at which your investment would have grown each year to reach its current value. It is important to note that CAGR is effective only when returns are reinvested and steadily compounded.
Example
Suppose you invested ₹2,00,000 five years ago and the investment is now worth ₹4,50,000. Instead of manually applying the formula, you can enter these values into the calculator. The CAGR would be approximately 17.61% per year.
This means your investment effectively grew at an average compounded rate of 17.61% annually over five years.
Difference Between CAGR, IRR and XIRR
While CAGR is widely used, it is important to understand how it differs from IRR and XIRR, especially when analysing investments involving multiple cash flows.
| Metric | Full Form | Used For | Cash Flow Assumption | Time Period Handling |
|---|---|---|---|---|
| CAGR | Compound Annual Growth Rate | Lump-sum investments with single start and end value | Assumes one initial investment and one final value | Equal time period |
| IRR | Internal Rate of Return | Investments with multiple periodic cash flows | Assumes regular, periodic cash flows | Equal intervals |
| XIRR | Extended Internal Rate of Return | SIPs or irregular investments | Handles irregular cash flows | Exact dates considered |
CAGR works best when there is a single lumpsum investment and a single redemption value. IRR is suitable when there are multiple investments made at regular intervals, such as structured projects or recurring deposits. XIRR is more accurate for mutual fund SIPs or investments made on different dates, as it accounts for irregular cash flow timing.
If you invested once and withdrew once, CAGR is sufficient. If you invested multiple times at different intervals, XIRR provides a more precise measure of returns.
Any metric that grows over time, including user base, sales, or market size, can be analysed using CAGR.
Start Calculating Your Investment Growth
Use the CAGR Calculator to understand how your investment has performed and to plan future financial goals with clarity. Enter your investment values above and get your CAGR instantly.
Frequently Asked Questions
What does a higher CAGR indicate?
Is CAGR the same as average annual return?
Can CAGR predict future returns?
Is the CAGR Calculator free to use?
When should I use CAGR instead of XIRR?
Does CAGR include dividends or interest income?
Can CAGR be negative?