CAGR Calculator
Calculate annualised growth between a starting value and an ending value.
Use exact dates, inflation and a comparison benchmark.
CAGR versus total return: measure the same investment two ways
CAGR is the constant annual growth rate that connects a beginning value with an ending value. Total return describes the change across the whole period; CAGR annualizes it using compounding. It works for a single starting investment without external contributions or withdrawals. Use XIRR when cash enters or leaves on different dates.
Worked example
Rs 1,00,000 growing to Rs 1,21,000 over two years represents 21% total growth and 10% CAGR, not 10.5%. If the ending value instead falls to Rs 81,000, total return is -19% and CAGR is -10%. A zero ending value represents a complete loss and a -100% annualized endpoint result.
Formula and calculation method
CAGR = (ending value / beginning value)^(1 / years) - 1Beginning value must be positive and ending value may be zero. Date mode uses the actual number of calendar days divided by 365, including leap days. Entered-years mode uses your number directly. No interim rounding is applied. Annualizing a short holding period can create a very large number without implying that the same performance will continue.
Interpretation and limitations
Real CAGR divides the annual growth factor by the annual inflation factor, then subtracts one. Benchmark ending value compounds the same starting amount at the benchmark rate over the same duration. Neither benchmark nor inflation defaults are live data. Taxes and fees are reflected only to the extent that your entered ending value already includes them.
Reference: FINRA: investment returns explained.
CAGR Calculator: Frequently Asked Questions
What is CAGR?
CAGR stands for compound annual growth rate. It is the constant yearly rate that would turn an initial value into an ending value over a specified period without external contributions or withdrawals.
What is the CAGR formula?
Divide ending value by beginning value, raise the result to 1 divided by years, then subtract 1. Multiply by 100 to express the answer as a percentage. The beginning value and duration must be positive.
How is CAGR different from absolute return?
Absolute return measures the total percentage change between two values. CAGR annualizes that change with compounding. Rs 1 lakh becoming Rs 1.21 lakh in two years is 21% absolute return but 10% CAGR.
Can CAGR be negative?
Yes. If the ending value is below a positive starting value, CAGR is negative. A fall from Rs 1 lakh to Rs 81,000 over two years corresponds to a -10% CAGR, not a -19% yearly loss.
Can I calculate CAGR for less than one year?
Yes, but annualizing a short period can make a modest short-term change look very large. The result is a mathematical annualized rate, not evidence that the same performance will continue for a year.
More questions (5)
Is CAGR the average of annual returns?
No. An arithmetic average adds annual percentages and divides by the number of years. CAGR uses compounded endpoint growth. Volatile annual returns can have an arithmetic average quite different from the compound rate.
Can CAGR measure business revenue growth?
Yes, positive starting revenue and a non-negative ending revenue can be compared over a chosen duration. That measures endpoint revenue growth, not profitability, investment return or the effect of acquisitions on the business.
Can I use CAGR for a SIP?
Not when you make recurring external contributions. Dividing the ending value by the first installment or by total contributions ignores timing. XIRR accounts for the actual dates and amounts.
Does CAGR tell me investment risk?
No. Two investments with the same endpoints can have very different volatility and drawdowns. CAGR does not reveal the path, future performance or probability of loss.
Why does exact-date CAGR differ from whole-year CAGR?
Date mode uses actual days / 365. An interval containing a leap day may be slightly longer than a whole number of 365-day years. Select the convention that matches your comparison.