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 profits are reinvested. Formula: CAGR = (Final Value / Initial Value)^(1/Years) - 1.

How is CAGR different from simple growth rate?

Simple growth rate = (Final - Initial) / Initial. CAGR smooths out volatile year-to-year returns to show the steady annual rate that would produce the same final result. CAGR is more useful for comparing investments over different time periods.

What is a good CAGR for mutual funds in India?

For Indian equity mutual funds, a CAGR of 12-15% over 10+ years is considered good. Nifty 50 has delivered roughly 12-13% CAGR historically. Debt funds typically deliver 6-8% CAGR.

📈 Investment Calculator

CAGR Calculator

Calculate the Compounded Annual Growth Rate of any investment. Find CAGR, future value projection, or required years — with year-by-year breakdown.

Initial value (₹)

₹

Final value (₹)

₹

Number of years

yrs

CAGR --%

--Initial

--Final value

--Total gain

Year-by-year value growth

📊 Compare with benchmarks

Year-by-year breakdown

Year	Value	Growth ₹	Total gain

What is CAGR and how is it calculated?

CAGR (Compounded Annual Growth Rate) is the rate at which an investment would need to grow every year to go from its initial to final value over a given period, assuming gains are reinvested each year.

CAGR = (Final Value / Initial Value) ^ (1 / Years) − 1
Future Value = Initial × (1 + CAGR) ^ Years
Years = log(Final / Initial) / log(1 + CAGR)

📈 Why CAGR matters

CAGR smooths out year-to-year volatility to show the true average growth rate. It is the most used metric to compare mutual funds, stocks, and business revenue growth over time.

🇮🇳 Indian benchmarks

Nifty 50: ~12% CAGR (10yr). Sensex: ~13% CAGR. FD: 6-7%. PPF: 7.1%. Inflation: ~6%. A good equity mutual fund CAGR is 14-18% over 10+ years.

⚡ Rule of 72

Divide 72 by the CAGR % to estimate years to double. At 12% CAGR, money doubles in 6 years (72/12). At 9%, it takes 8 years. Simple but powerful mental shortcut.

⚠️ CAGR limitations

CAGR assumes smooth growth every year, which doesn't happen in practice. A fund could lose 50% in year 1 and gain 100% in year 2, giving 0% CAGR but very different experience.

Frequently asked questions

What does CAGR mean?

CAGR stands for Compound Annual Growth Rate. It is the rate at which an investment grows annually from start to end, assuming profits are reinvested each year. It is the most widely used metric to compare investment performance over different periods.

What is a good CAGR for mutual funds?

For Indian equity mutual funds, 12–18% CAGR over 10+ years is considered good. The Nifty 50 index has delivered approximately 12–13% CAGR historically. Debt funds deliver 6–8% CAGR. Always compare against the benchmark index of the fund.

How is CAGR different from absolute returns?

Absolute return = (Final - Initial) / Initial × 100. It does not account for time. CAGR = Annualised return accounting for compounding. If ₹1 lakh becomes ₹2 lakh in 6 years, absolute return is 100% but CAGR is only 12.25% per year.

Can CAGR be negative?

Yes. If your final value is less than the initial value, CAGR is negative. For example, ₹1 lakh becoming ₹70,000 in 3 years gives CAGR of approximately −11.1%. This means the investment lost value each year on average.