CAGR Calculator
Compute the Compound Annual Growth Rate of any investment
What is CAGR (Compound Annual Growth Rate)?
CAGR (Compound Annual Growth Rate) is the rate at which an investment would have grown if it grew at a steady annual rate. It smooths out the volatility of year-to-year returns to give a single, meaningful number representing the investment's growth trajectory. CAGR is the most widely used metric to evaluate and compare investment performance over time.
Mutual funds, stocks, business revenues, and economic indicators are all commonly measured using CAGR. When a mutual fund advertises "18% CAGR over 10 years," it means a ₹1 lakh investment would have grown to approximately ₹5.23 lakh over that period.
CAGR Formula
Absolute Return = (Final − Initial) / Initial × 100%
CAGR vs Absolute Return vs XIRR
| Metric | What it Shows | When to Use |
|---|---|---|
| Absolute Return | Total % gain/loss from start to end | Short period comparisons |
| CAGR | Annualised growth assuming constant rate | Lumpsum investments, fund comparison |
| XIRR | Annualised return for irregular cash flows | SIP investments with multiple buy/sell dates |
| Rolling Returns | CAGR calculated over multiple overlapping periods | Assessing consistency of fund performance |
CAGR Calculation — Worked Example
| Initial Value | ₹1,00,000 |
| Final Value | ₹3,00,000 |
| Period | 5 years |
| Formula applied | (3,00,000 ÷ 1,00,000)^(1/5) − 1 |
| CAGR | 24.57% per year |
| Absolute Return | 200% over 5 years |
How to Calculate CAGR in Excel
Excel has no dedicated CAGR function. Use the power formula:
For mutual funds with multiple SIP transactions, use XIRR instead — it accounts for the timing of each cash flow and gives a more accurate annualised return figure than simple CAGR.