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CAGR Calculator – Compound Annual Growth Rate
Calculate the Compound Annual Growth Rate (CAGR) of any investment with our free calculator. CAGR is one of the most widely used metrics in finance to measure the smoothed annual return of an investment over a specified period. Unlike simple average returns, CAGR accounts for the compounding effect, giving you a more accurate picture of investment performance. Whether you are evaluating mutual fund returns, stock performance, business revenue growth, or real estate appreciation, CAGR provides a standardised way to compare different investments.
What is CAGR?
CAGR stands for Compound Annual Growth Rate. It measures the average annual growth rate of an investment over a period of time.
CAGR shows how much your investment grows each year on average.
It is widely used globally across India, USA, UK, Canada, and Australia.
- Stock market investments
- Mutual funds
- Business growth analysis
- Revenue tracking
- Portfolio performance
When is CAGR Used?
CAGR is used to measure the growth of an investment over time and compare different investment options.
- Analyzing stock returns
- Evaluating mutual funds
- Comparing investments
- Tracking business growth
- Financial planning
Typical CAGR Returns (Global)
| Investment Type | Average CAGR |
|---|---|
| Savings Account | 2–4% |
| Bonds | 4–6% |
| Fixed Deposits | 5–7% |
| Mutual Funds | 8–12% |
| Stock Market | 10–15% |
CAGR Formula
CAGR = (Final Value / Initial Value)^(1 / n) − 1
Where Initial Value is starting investment, Final Value is ending value, and n is number of years.
Real CAGR Example
Initial Investment = $10,000
Final Value = $20,000
Time Period = 5 years
CAGR ≈ 14.87%
Who Should Use a CAGR Calculator?
- Investors
- Stock traders
- Business owners
- Financial analysts
- Portfolio managers
Why CAGR is Important ⭐
- Smooths volatility
- Helps compare investments
- Shows true growth
- Removes fluctuations
- Improves decisions
CAGR vs Absolute Returns ⭐
Absolute return shows total growth, while CAGR shows average annual growth.
Total Return = 100% in 5 years
CAGR ≈ 14.87%
Common CAGR Mistakes ⭐
- Ignoring time period
- Using incorrect formula
- Comparing different durations
- Ignoring inflation
- Assuming constant growth
How to Use This CAGR Calculator
- Select your currency.
- Enter the beginning (initial) value of your investment.
- Enter the ending (final) value.
- Enter the number of years the investment was held.
- View the CAGR percentage, absolute return, and growth chart.
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Frequently Asked Questions
What is CAGR?
CAGR is the rate at which an investment would have grown if it grew at a steady rate every year, smoothing out volatility.
How is CAGR different from average return?
Average return ignores compounding. CAGR accounts for it and gives the actual equivalent annual growth rate.
What is a good CAGR?
Stock indices historically deliver 10-12%. Bonds 4-6%. Real estate 8-10%. A good CAGR should beat inflation.
Can CAGR be negative?
Yes, if the ending value is less than the beginning value, CAGR will be negative.
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