CAGR, or compound annual growth rate, expresses the constant annualised growth rate that would turn an initial value into a final value over a specified period.
How to use the CAGR Calculator
- Enter the starting value.
- Enter the ending value.
- Enter the number of years.
- Calculate the annualised growth rate.
CAGR formula
CAGR = (Ending Value ÷ Beginning Value)1 / Years − 1.
Example
If an investment grows from ₹1,00,000 to ₹1,46,410 over 5 years, CAGR represents the constant annual rate that produces the same start-to-end growth.
Important considerations
CAGR smooths the path between two values. It does not show year-by-year volatility and should not be interpreted as the actual return earned in every year.
Limitations
CAGR is meaningful when the start value, end value and period are comparable. It does not account for interim cash flows unless those are incorporated separately.
Frequently asked questions
Does CAGR show actual yearly returns?
No. CAGR is an annualised equivalent rate between two endpoints and hides the variation that occurred during the period.
Can CAGR be used when there are regular deposits?
Not directly. Regular contributions change the cash-flow pattern, so an XIRR or cash-flow-aware calculation is more appropriate.
Content note: Methodology note. Calculation results depend on the inputs and assumptions shown on this page.