CAGR Calculator
Find your Compound Annual Growth Rate instantly — or project how much your investment will grow at a given CAGR.
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What is CAGR?
CAGR (Compound Annual Growth Rate) is the rate at which an investment grows from its initial value to its final value over a given number of years, assuming the profits are reinvested at the end of each year. It is one of the most widely used metrics in finance to compare investment returns.
Think of CAGR as the "smoothed out" annual return — it irons out the year-to-year volatility and gives you a single representative growth rate. For example, if your mutual fund returned 25% one year and −5% the next, the CAGR would not be 10% (simple average) but rather the geometrically correct rate that gets you from the start value to the end value.
CAGR = (FV / PV)1/n − 1
// Where:
FV = Final Value PV = Initial (Present) Value
n = Number of years
// Example: ₹1,00,000 → ₹2,00,000 in 5 years
CAGR = (2,00,000 / 1,00,000)1/5 − 1 = 14.87%
To find the Future Value from a known CAGR: FV = PV × (1 + CAGR)ⁿ. Use the "Find Future Value" toggle above to project your wealth.
CAGR vs XIRR — Which Should You Use?
| Parameter | CAGR | XIRR |
|---|---|---|
| Best For | Single lump sum investment | SIP / multiple investments |
| Cash Flows | One investment, one redemption | Multiple at irregular dates |
| Accounts for Timing? | ❌ Only start & end date | ✅ Exact transaction dates |
| Calculation Method | Direct formula | Newton-Raphson iteration |
| Excel Function | =(FV/PV)^(1/n)−1 | =XIRR(values, dates) |
| Handles Withdrawals? | ❌ No | ✅ Yes |
| Accuracy for SIP | ❌ Misleading | ✅ Most accurate |
| Result equals other when | One investment + one redemption only | |
👉 Use CAGR for lump-sum comparisons and fund performance benchmarks. Use XIRR for your actual SIP portfolio returns — it's always more accurate for real investors.
How CAGR Works — Step by Step Example
Let's say you invested ₹1,00,000 in a mutual fund and after 5 years it grew to ₹2,00,000.
- Divide FV by PV: 2,00,000 ÷ 1,00,000 = 2.0 (the growth multiple)
- Apply the exponent: 2.0^(1/5) = 2.0^0.2 = 1.1487
- Subtract 1: 1.1487 − 1 = 0.1487
- Convert to %: 0.1487 × 100 = 14.87% CAGR 🎉
- Verification: ₹1,00,000 × (1.1487)⁵ = ₹2,00,000 ✅
Key insight: The absolute return was 100% (doubled your money), but the CAGR is only 14.87%. This is because compounding works in both directions — earlier years compound on a smaller base. CAGR correctly reflects this annual "smoothed" return.
CAGR in Mutual Funds — Benchmarks for India
Mutual fund return advertisements in India almost always use CAGR. Here are realistic CAGR benchmarks across fund categories as of 2026:
⚠️ Past CAGR does not guarantee future returns. These are historical averages over 10-year periods and will vary by fund and market cycle.
Limitations of CAGR
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Ignores Volatility. Two funds can have the same 10-year CAGR with very different risk profiles. One may have had wild swings while the other grew steadily. CAGR tells you nothing about this journey — use Standard Deviation alongside CAGR for a complete picture.
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Not Suitable for SIPs. CAGR assumes a single lump-sum investment at the start. If you've been investing monthly via SIP, CAGR will give you a misleading result. Always use XIRR for SIP returns.
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Sensitive to Start/End Date. CAGR only looks at two points in time. If you happened to start at a market peak or end at a market trough, the CAGR will look much worse than the fund's typical performance. This is called "measurement period bias."
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Ignores Intermediate Cash Flows. Any dividends received, partial redemptions, or additional top-up investments are ignored by CAGR. For portfolios with multiple cash flows, XIRR is always the right metric.
📌 When to Use CAGR
Use CAGR to compare lump-sum investment performance, benchmark mutual funds, or evaluate business growth metrics over multi-year periods.
🔗 CAGR vs Absolute Return
If ₹1L → ₹2L in 5 years, absolute return = 100% but CAGR = 14.87%. Absolute return doesn't account for time — CAGR does.
⚡ Rule of 72
Divide 72 by the CAGR to estimate how many years it takes to double your money. At 12% CAGR: 72 ÷ 12 = 6 years to double.
🧮 CAGR in Excel
Use =(FV/PV)^(1/n)-1 or the built-in RRI function: =RRI(n, PV, FV). Both give identical results.
Related Financial Calculators
What is CAGR and how is it calculated?
CAGR (Compound Annual Growth Rate) is the annualised growth rate of an investment over a given period. Formula: CAGR = (FV/PV)^(1/n) − 1. For example, ₹1,00,000 growing to ₹2,00,000 in 5 years gives a CAGR of 14.87% per annum.
What is a good CAGR for mutual funds in India?
- Large-cap equity funds: 10–14% is good
- Mid-cap funds: 12–18% over 10 years
- Small-cap funds: 15–22% (higher risk)
- Debt funds: 6–9% is normal
- Anything above 15% sustained over 10+ years in equity is outstanding
What is the difference between CAGR and XIRR?
CAGR assumes a single lump-sum investment — one start date, one end date. XIRR handles multiple cash flows at irregular dates and amounts, making it ideal for SIPs. For a single investment and redemption, both give identical results. For SIPs, always use XIRR.
Can CAGR be used for SIP returns?
No — CAGR is not appropriate for SIP because SIP involves multiple investments at different times. Using CAGR on SIP data overstates the actual return because later instalments (invested for a shorter duration) are treated as if they had the full investment horizon. Use our XIRR Calculator for accurate SIP returns.
What is the difference between CAGR and absolute return?
Absolute return = (FV − PV) / PV × 100. It tells you the total % gain without considering time. CAGR annualises this return. A 100% absolute return over 10 years is only 7.18% CAGR — very different numbers. CAGR is more meaningful for comparing investments of different durations.
What are the limitations of CAGR?
Three key limitations: (1) It ignores volatility — a stable fund and a volatile one can show the same CAGR. (2) It cannot be used for SIP or multiple cash flows. (3) It is sensitive to start/end date selection, which can distort the picture if peak/trough dates are chosen.