What Is CAGR?
CAGR (Compound Annual Growth Rate) is the annualised rate at which an investment grew from its starting value to its ending value, assuming profits were reinvested each year. It is expressed as a percentage per annum.
Year-by-year performance swings sharply. A fund might return 32% in one year and lose 18% the next. CAGR converts that entire journey into one annual rate so you can compare investments on the same footing.
Under AMFI guidelines issued by SEBI, all mutual fund performance data for periods exceeding one year must be reported as CAGR. When a fund fact sheet says its 5-year return is 16.4%, that number is CAGR. It is the standard unit of measurement for comparing any investment that runs longer than twelve months.
CAGR Formula: How to Calculate Compound Annual Growth Rate
The formula has three inputs and one output:
CAGR = (Final Value / Initial Value) ^ (1 / n) minus 1| Variable | Meaning |
|---|---|
| Final Value (FV) | The ending value of the investment |
| Initial Value (PV) | The starting amount originally invested |
| n | The number of years held |
| CAGR | Result is a decimal. Multiply by 100 for the percentage. |
Worked example: Rs 1 lakh grows to Rs 2.5 lakh over 7 years. CAGR = (2,50,000 / 1,00,000)^(1/7) minus 1 = 13.99% per annum. Each individual year would have looked different, but 13.99% is the equivalent steady rate that produced the same final result.
CAGR Formula in Excel: Three Methods
Assume A2 holds the initial value, B2 holds the final value, and C2 holds the number of years.
| Method | Formula | Notes |
|---|---|---|
| Direct formula | =((B2/A2)^(1/C2))-1 | Works in all Excel versions. Format as %. |
| POWER function | =POWER(B2/A2,1/C2)-1 | Equivalent, more readable. |
| RRI function | =RRI(C2,A2,B2) | Simplest. Excel 2013 and later only. |
The RRI function is the easiest. Type =RRI(5,A2,B2) for a 5-year CAGR, format the cell as a percentage, and you are done. Most finance professionals who calculate CAGR frequently in Excel use the RRI function.
5-year CAGR in Excel: =((B2/A2)^(1/5))-1
10-year CAGR in Excel: =((B2/A2)^(1/10))-1
Reverse CAGR Calculator: Finding Duration and Target Value
The standard CAGR formula finds the growth rate when you know the start and end values. A reverse CAGR calculator works the other way. Given a starting amount, a target, and an assumed annual growth rate, it tells you how many years are needed.
The Reverse CAGR tab handles this. The formula it uses: n = log(Final Value / Initial Value) divided by log(1 + CAGR). Most long-term investors use this to answer questions like "at 12% CAGR, how long before my portfolio of Rs 20 lakh reaches Rs 1 crore?" The answer is 17.1 years.
Rule of 72: Divide 72 by the CAGR percentage to get a rough estimate of how many years it takes to double your money. At 12%, that is 6 years. At 8%, it is 9 years. The exact figures are in the table below.
| CAGR | Rule of 72 estimate | Exact years to double |
|---|---|---|
| 6% | 12 years | 11.9 years |
| 8% | 9 years | 9.0 years |
| 10% | 7.2 years | 7.3 years |
| 12% | 6 years | 6.1 years |
| 15% | 4.8 years | 5.0 years |
| 20% | 3.6 years | 3.8 years |
Monthly CAGR Formula and Calculation
Monthly CAGR is the equivalent monthly growth rate for a given annual CAGR. You need it when working with monthly return data or comparing investments that report returns on a monthly basis.
Monthly CAGR = (1 + Annual CAGR) ^ (1 / 12) minus 1| Annual CAGR | Monthly CAGR | Typical use |
|---|---|---|
| 6% | 0.487% | PPF, conservative debt |
| 8% | 0.643% | EPF, hybrid funds |
| 10% | 0.797% | Large-cap equity planning |
| 12% | 0.949% | Standard equity assumption |
| 15% | 1.171% | Flexicap, diversified equity |
| 20% | 1.531% | Midcap, smallcap (historical) |
To calculate monthly CAGR from raw monthly data: (Final Value / Initial Value)^(1 / total months) minus 1. To annualise a monthly CAGR back: (1 + monthly rate)^12 minus 1.
Lumpsum CAGR Calculator: What It Measures
This is a lumpsum CAGR calculator. It measures the annualised return on a single, one-time investment. Put money in once, leave it untouched, check the value later. The CAGR tells you how fast it grew each year, on average.
SIP returns cannot use CAGR. Each monthly SIP instalment is invested at a different NAV on a different date, so the holding period differs for every unit purchased. The correct measure for SIP portfolios is XIRR, which accounts for the exact timing of every cash flow. The return shown on your broker app for a SIP portfolio is always XIRR. Use Fermor's XIRR Calculator for SIP portfolios.
CAGR vs Absolute Return: What Is the Difference?
Absolute return measures the total gain with no reference to time. If Rs 1 lakh became Rs 2 lakh, the absolute return is 100%, whether that took 2 years or 20. CAGR adjusts for how long the investment ran and converts the gain into an annual rate, making it possible to compare investments held for different durations.
| Scenario: Rs 1 lakh to Rs 2 lakh | Absolute Return | CAGR per year |
|---|---|---|
| In 2 years | 100% | 41.4% |
| In 5 years | 100% | 14.87% |
| In 7 years | 100% | 10.41% |
| In 10 years | 100% | 7.18% |
This is why comparing funds using absolute return is misleading. Two funds both showing 60% absolute returns look equal, but if one achieved it in 3 years (CAGR: 17.2%) and the other took 7 years (CAGR: 7.0%), they are entirely different propositions.
What Is a Good CAGR for Indian Investments?
The answer depends on the asset class and time horizon. Based on historical data from NSE India and AMFI fund fact sheets, these are the typical CAGR ranges for common Indian financial instruments over a 10-year holding period.
| Asset / Benchmark | 10-Year CAGR (approx) | Risk level |
|---|---|---|
| Bank savings account | 3.5 to 4% | None |
| Fixed deposit (major banks) | 6 to 7.5% | Very low |
| Public Provident Fund (PPF) | 7.1% | None (government-backed) |
| EPF (EPFO) | 8.25% | None (government-backed) |
| Debt mutual funds | 6 to 8% | Low |
| Nifty 50 Index Fund | 11 to 13% | Moderate |
| Large-cap equity mutual funds | 11 to 14% | Moderate to high |
| Flexicap and multicap funds | 13 to 17% | High |
| Midcap and smallcap funds | 15 to 22% | Very high |
For long-term financial planning, 10 to 12% is the commonly used equity CAGR assumption in India. Midcap and smallcap funds have historically produced higher numbers, but the volatility is substantial. The Nifty 50 has delivered roughly 11.9% CAGR over the past 10 years on a price return basis. Past CAGR does not guarantee future performance.
CAGR for Mutual Funds in India
SEBI, through its circular on performance disclosure, mandates that all mutual fund schemes report returns as CAGR for periods of one year and above. This covers all categories: equity, debt, hybrid, and solution-oriented funds. AMFI publishes these figures monthly on amfiindia.com. The trailing return figures on Groww, Zerodha Coin, and Kuvera all pull from this AMFI data.
Trailing returns vs rolling returns
Trailing CAGR measures from a fixed historical date to today. The number you see on a fact sheet right now is the 1-year, 3-year, 5-year, and 10-year trailing CAGR as of the current month. The problem is that it is sensitive to where the start date falls in a market cycle. A fund whose 5-year window starts at a market trough will show inflated trailing returns. Rolling returns average the CAGR across every possible 5-year window within a longer period. A fund with strong rolling returns is a consistently performing fund, not one that got lucky with the measurement date.
How to use this calculator for mutual funds
Enter your initial NAV or investment amount as the starting value. Enter the current NAV or portfolio value as the final value. Enter the years since you first invested. To compare two funds, run the calculation for each and compare the resulting CAGR percentages directly.
CAGR Calculator for Stocks
Enter the price at which you bought the stock as the initial value, the current price as the final value, and the number of years you have held it. The result is the stock's annualised price CAGR.
Example: You bought Infosys shares at Rs 800 in 2019. The price today is Rs 1,640. Holding period: 6 years. CAGR = (1,640 / 800)^(1/6) minus 1 = 12.75% per annum.
This is price return only. It does not include dividends. For total return, add all dividends received during the holding period to the current price before entering it as the final value.
If you bought shares across multiple purchase dates at different prices, CAGR will be inaccurate. Use the XIRR Calculator instead.
SIP Returns and CAGR: Which to Use?
A SIP sends a fixed amount into a fund every month. Each monthly purchase happens at a different NAV on a different date, so the holding period for each unit is different. CAGR was designed for a single investment with one entry and one exit. It cannot handle this.
XIRR does the job correctly. It finds the discount rate that makes the present value of all your investments equal to the current portfolio value, accounting for exact investment dates. When you see a "12% return" on your SIP portfolio in Zerodha or Groww, that is XIRR, not CAGR. A fund's fact sheet showing "12% CAGR over 5 years" refers to a lumpsum investment made exactly 5 years ago. Your actual SIP return will differ. Use our XIRR Calculator to find it.
CAGR vs XIRR vs IRR
CAGR
Single lumpsum investment. One entry date, one exit date, no cash flows in between. This is the right tool for evaluating the performance of a single investment made at a single point in time.
XIRR
Multiple cash flows at irregular dates: monthly SIP instalments, partial withdrawals, dividend reinvestments. XIRR is the extended version of IRR that handles uneven gaps between transactions. It is the only correct way to measure a SIP portfolio's return.
IRR
Used in corporate finance for projects with regular periodic cash flows. For personal investing, CAGR and XIRR between them cover all common scenarios.
Limitations of CAGR
How to Use This CAGR Calculator
There are three modes. Select the tab that matches what you need to find:
- CAGR %: enter the initial investment, the final or current value, and the number of years. The calculator returns the compound annual growth rate.
- Future Value: enter the initial investment, an assumed CAGR, and the number of years. The calculator projects the value your investment would reach.
- Reverse CAGR: enter the starting amount, the target value you want to reach, and an assumed CAGR. The calculator returns the number of years needed.
Click any input value to type a precise number. Use the year preset buttons (1Y, 3Y, 5Y, 10Y, 15Y, 20Y, 30Y) to switch duration quickly. The currency selector converts all displayed amounts to USD, EUR, GBP, or other currencies. Useful for NRI investors who want to see Indian portfolio values in their resident country's currency. Expand the year-by-year table to see how compounding builds value at each milestone.
Frequently Asked Questions
Disclaimer: All calculations on this page are indicative only. CAGR is a mathematical measure of historical growth and does not predict future returns. Past performance of any investment does not guarantee future results. This calculator is for educational and planning purposes and does not constitute financial advice. Consult a SEBI-registered investment adviser before making investment decisions.