- Initial value
- Gain
- CAGR
- —
- Absolute return
- —
- Total gain
- —
Figures are estimates for planning only, not investment or tax advice.
Compound annual growth rate is the single yearly rate that would take an investment from its starting value to its ending value over a given period. It is the fairest way to compare investments held for different lengths of time.
The formula
CAGR = (Final ÷ Initial)1/n − 1, expressed as a percentage. An investment that went from ₹1,00,000 to ₹2,00,000 in 5 years has a CAGR of 14.87%, not 20% — that 100% gain is the absolute return, which the calculator also shows.
What CAGR hides
CAGR smooths the path. A fund that returned 40%, −25% and 30% has the same CAGR as one that returned a steady 11.5% a year, but the experience of holding them is completely different. Always look at CAGR alongside the worst single year.
Frequently asked questions
CAGR or absolute return — which should I quote?
CAGR for anything held longer than a year; absolute return for shorter periods.
Does CAGR work when there are additional investments?
No. Use the XIRR calculator when money went in or out on several dates.
Can CAGR be negative?
Yes, whenever the final value is below the initial value.
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