CAGR Calculator

Output:
Investment Growth Over Time

Compound Annual Growth Rate (CAGR) Calculator – Calculate Your Investment Growth

The Compound Annual Growth Rate (CAGR) is a financial metric that measures the average annual growth rate of an investment over a specified time period. It is widely used in financial analysis to compare investment options and predict future returns.

Use our CAGR Calculator to determine the annualized return on your investments, helping you make informed financial decisions.

What is CAGR?

CAGR (Compound Annual Growth Rate) is a key financial measure that helps investors assess the growth of an investment over time. Unlike simple returns, CAGR considers the effect of compounding, making it a more accurate representation of investment performance.

It is commonly used in:

  • Mutual funds and stock market analysis.
  • Comparing the performance of different investment options.
  • Evaluating business revenue and financial projections.

How to Calculate CAGR?

The CAGR formula is:

CAGR (%) = [(Final Value / Initial Value) ^ (1 / Number of Years)] - 1

Where:

  • Final Value: The value of the investment at the end of the period.
  • Initial Value: The value of the investment at the beginning.
  • Number of Years: The total investment duration.

Example of CAGR Calculation

Let's say you invested ₹50,000 in a stock, and after 5 years, its value increased to ₹1,00,000. Using the CAGR formula:

CAGR = [(1,00,000 / 50,000) ^ (1 / 5)] - 1

CAGR = 14.87%

This means your investment grew at an average annual rate of 14.87%.

Benefits of CAGR

  • Accurate Growth Measurement: Helps understand the real return of an investment.
  • Comparison Across Investments: Useful for evaluating mutual funds, stocks, and real estate.
  • Removes Market Volatility: CAGR smoothens short-term fluctuations.

Frequently Asked Questions (FAQs)

A good CAGR depends on the type of investment. For stocks, a CAGR of 12-15% is considered good, while for fixed deposits, 6-7% is decent.

Yes, if the final investment value is lower than the initial value, CAGR will be negative, indicating a loss.

CAGR provides a more realistic measure of return as it accounts for compounding, unlike a simple average return which does not.

Conclusion

The CAGR Calculator is an essential tool for investors looking to analyze and compare the growth of different investments over time. It simplifies financial planning by providing an accurate representation of annualized returns.

Use our CAGR Calculator to make smarter investment decisions today!