About the CAGR Calculator
Our CAGR Calculator helps you measure the true annualized growth rate of your investments. CAGR smooths out volatility and gives you a single growth rate that represents the geometric progression of your investment value over time.
How the Calculation Works
The mathematical formula used by this calculator is: CAGR = (Ending Value / Beginning Value)^(1/n) - 1. Where Ending Value = Current/final investment value, Beginning Value = Initial investment, n = Number of years. CAGR represents the constant rate at which an investment would have grown.
Key Benefits
- Measure true returns
- Compare investments
- Smooth out volatility
- Benchmark performance
Frequently Asked Questions
What is CAGR and how is it used in investing?
CAGR (Compound Annual Growth Rate) is the smoothed annual growth rate of an investment over a period. It tells you the steady rate at which your money grew each year, ignoring yearly volatility. If a mutual fund grew from ₹1 lakh to ₹3 lakh in 5 years, CAGR = (3/1)^(1/5) - 1 = 24.57% per year. This makes comparing investments of different durations meaningful and removes the distortion of a single bumper or bad year. Use the free CAGR Calculator on AbacusHand to calculate your exact result instantly.
How do you calculate CAGR using the formula?
CAGR formula: CAGR = (Ending Value / Beginning Value)^(1/Number of Years) - 1. Example: invested ₹2 lakh in 2020, now worth ₹4 lakh in 2025 (5 years). CAGR = (4/2)^(0.2) - 1 = 14.87%. This means your investment grew at an effective rate of 14.87% per year, even if individual years varied. SEBI mandates mutual funds to display 1-year, 3-year, and 5-year CAGR in all fact sheets. Use the free CAGR Calculator on AbacusHand to calculate your exact result instantly.
What is the difference between CAGR and absolute return?
Absolute return is the total gain without considering time: if ₹1 lakh became ₹2 lakh, absolute return is 100% regardless of whether it took 2 years or 10 years. CAGR adjusts for time: the same doubling over 5 years = 14.87% CAGR, but over 10 years = only 7.18% CAGR. Absolute returns are misleading when comparing investments of different durations. Always compare mutual funds using CAGR. Use the free CAGR Calculator on AbacusHand to calculate your exact result instantly.
What is considered a good CAGR for a mutual fund in India?
For Indian equity mutual funds, a good CAGR benchmark is: 3-year CAGR above 12%, 5-year CAGR above 14%, and 10-year CAGR above 12%. The Nifty 50 has delivered approximately 12–14% CAGR over the past 20 years. Small-cap funds have historically returned 16–20% CAGR over 10+ years but with significantly higher volatility. Debt funds typically offer 7–9% CAGR, slightly above inflation. Use the free CAGR Calculator on AbacusHand to calculate your exact result instantly.
What is the difference between CAGR and XIRR?
CAGR works best for lumpsum investments with a single start and end point. XIRR (Extended Internal Rate of Return) handles irregular cash flows and is more accurate for SIP investments or partial withdrawals at different intervals. If you invest ₹5,000/month in a mutual fund via SIP over 3 years, XIRR gives the true annualised return — not CAGR. SEBI-regulated platforms and AMCs now display XIRR for all SIP-based performance comparisons. Use the free CAGR Calculator on AbacusHand to calculate your exact result instantly.