CAGR Calculator
Find the compound annual growth rate between two values. Compare total return, inflation-adjusted growth, a benchmark and the smoothed year-by-year path.
Last Updated: July 22, 2026Calculate Compound Annual Growth Rate
Enter positive beginning and ending values. Use years plus months for a more precise holding period.
Enter valid figures and select Calculate CAGR.
| Elapsed period | Smoothed value | Growth from start | Benchmark value | Value in today's money |
|---|
CAGR connects one beginning value with one ending value through a constant compounded rate. It does not show volatility, cash-flow timing, fees, taxes or the actual return earned in each year.
What Is CAGR?
CAGR means compound annual growth rate. It is the constant annual rate that would turn a beginning value into an ending value over a selected period, assuming growth compounded at the same rate each year.
The word “constant” matters. An investment might rise 30% in one year, fall 15% in another and recover later. CAGR replaces that uneven path with one smoothed annual rate. It gives a clean way to compare investments, business revenue, property values, website traffic, customer counts and other positive measures held for different lengths of time.
CAGR is an annualized geometric return. It accounts for compounding, unlike a simple arithmetic average. It does not claim the value rose by the calculated rate every year.
How to Use This CAGR Calculator
- Select a currency. The selected currency only formats monetary values and does not change the CAGR percentage.
- Enter the positive value at the start of the measurement period.
- Enter the positive value at the end of the same period.
- Add complete years and any extra months. Use the actual holding period instead of rounding 4 years and 10 months to 5 years.
- Enter an inflation assumption to estimate real annual growth and ending purchasing power.
- Add a benchmark annual return if you want to compare the result with an index, target or alternative investment.
- Select Calculate CAGR. Review the annualized rate, absolute return, multiple, benchmark gap and smoothed value path.
Both values must be above zero because the standard CAGR formula uses a ratio and a fractional power. If an investment became worthless, the economic loss is 100%, but a conventional multi-year CAGR calculation with an ending value of zero is not useful in this tool.
CAGR Formula
CAGR = (Ending value ÷ Beginning value)1 ÷ years − 1
- Beginning value is the amount at the start.
- Ending value is the amount at the end.
- Years is the full period, including months expressed as a fraction of a year.
- Multiply the decimal result by 100 to express CAGR as a percentage.
Worked CAGR Example
Suppose an investment grows from ₹1,00,000 to ₹1,80,000 in five years.
CAGR = (₹1,80,000 ÷ ₹1,00,000)1 ÷ 5 − 1 = 0.1247, or about 12.47% per year.
- Total gain: ₹80,000
- Absolute return: 80%
- Money multiple: 1.80 times
- CAGR: about 12.47% a year
An 80% total return does not mean the investment earned 16% each year. Dividing 80% by five ignores compounding. A constant 12.47% compounded annually reaches the same ₹1,80,000 ending value.
CAGR vs Absolute Return, ROI, XIRR and IRR
Choose a return measure based on the cash-flow pattern and the question you need to answer.
| Metric | Best use | Uses time? | Handles multiple cash flows? |
|---|---|---|---|
| CAGR | Annualized growth from one beginning value to one ending value | Yes | No |
| Absolute return | Total percentage gain or loss over the whole period | No | No |
| ROI | Profit or loss compared with total cost | Not by itself | Limited |
| XIRR | Irregular dated deposits and withdrawals | Yes, exact dates | Yes |
| IRR | Periodic project or investment cash flows | Yes, equal periods | Yes |
Use CAGR when there are no contributions or withdrawals between the two values, or when you only need a start-to-finish summary. Use the XIRR Calculator for SIP instalments, staggered purchases, dividends taken in cash, withdrawals or any other dated flows.
How to Read a Positive, Zero or Negative CAGR
Positive CAGR
The ending value is higher than the beginning value. A 10% CAGR means a constant 10% compounded annual rate would reproduce the observed start and finish. It does not prove the value increased 10% in every individual year.
Zero CAGR
The starting and ending values are equal. Purchasing power may still have declined if inflation was positive. Fees or income received outside the ending value could also change the investor's true return.
Negative CAGR
The ending value is lower than the beginning value. For example, a fall from ₹1,00,000 to ₹80,000 in five years gives a CAGR of about −4.36%. The absolute loss is 20%, while the annualized loss is smaller because it is spread geometrically across five years.
Nominal CAGR vs Real CAGR After Inflation
Nominal CAGR measures the growth shown by the entered values. Real CAGR estimates growth in purchasing-power terms after applying the inflation assumption.
Real CAGR = (1 + nominal CAGR) ÷ (1 + inflation rate) − 1
If nominal CAGR is 12.47% and inflation averages 6%, real CAGR is about 6.10%, not 6.47%. The exact calculation divides growth factors instead of simply subtracting the two percentages.
The calculator also discounts each smoothed value into today's money. Inflation differs across countries, products and households, so treat the input as a planning assumption rather than a forecast.
Comparing CAGR With a Benchmark
A return becomes more informative when you compare it with a relevant benchmark over the same dates and in the same currency. The benchmark might be a broad market index, inflation, a deposit rate, a business target or the return available from another asset with similar risk.
This calculator compounds the entered benchmark rate from the same beginning value. It then reports:
- the hypothetical benchmark ending value,
- the annual percentage-point gap between CAGR and benchmark, and
- the ending-value surplus or shortfall against that benchmark.
The U.S. Securities and Exchange Commission's guide to reading a mutual fund shareholder report explains that fund reports show annualized returns alongside a benchmark and encourages attention to longer periods. Match the benchmark carefully. A low-risk deposit and a volatile equity portfolio do not have the same risk profile.
Benefits and Limits of CAGR
Why CAGR Is Useful
- It converts a multi-year change into one comparable annual rate.
- It accounts for compounding.
- It works across investments, business metrics and asset values.
- It makes periods of different lengths easier to compare.
- It needs only beginning value, ending value and time.
What CAGR Hides
- Annual volatility and the sequence of gains and losses.
- Deposits, withdrawals and distributions between the endpoints.
- Fees, taxes, transaction costs and inflation unless values already reflect them.
- Risk taken to earn the return.
- Whether the selected beginning and ending dates were unusually favorable.
Two assets can have the same five-year CAGR while following completely different paths. One may grow steadily. Another may suffer a large decline and then recover. CAGR alone does not show drawdown, consistency or risk.
Common CAGR Calculation Mistakes
- Using the wrong period: count the actual years and months between valuations.
- Ignoring added money: use XIRR if deposits or withdrawals occurred.
- Mixing price return and total return: include reinvested dividends or distributions when total performance is the goal.
- Comparing mismatched currencies: currency movement can change results. Use consistently valued endpoints.
- Forgetting fees and taxes: gross values can overstate the return you keep.
- Treating CAGR as a forecast: a historical smoothed rate does not guarantee future growth.
- Using a simple average: arithmetic averages do not reproduce compounded start-to-end growth.
When forecasting at the historical CAGR, test lower and higher rates too. The Investor.gov compound interest calculator illustrates how rate and time assumptions change future values.
Where CAGR Is Commonly Used
- Stocks, mutual funds and investment portfolios without intermediate cash flows.
- Property values between purchase and current valuation.
- Business revenue, profit, customers or market size.
- Website sessions, subscribers, downloads or sales.
- Commodity or precious-metal values across a holding period.
- Comparing long-term growth rates across assets and industries.
For a business metric, confirm that the starting and ending numbers use the same definition. A revenue figure before a merger is not directly comparable with a later consolidated figure unless you adjust the data.
Related Investment Calculators
Frequently Asked Questions
What does CAGR stand for?
CAGR stands for compound annual growth rate. It is the constant annual compounded rate connecting a positive beginning value and positive ending value over a selected period.
How do I calculate CAGR?
Divide ending value by beginning value, raise the result to the power of one divided by years, subtract one and multiply by 100. This calculator also accepts extra months.
Is CAGR the same as annual return?
CAGR is an annualized start-to-finish return. An individual annual return measures one specific year. CAGR smooths all years into one compounded rate and hides year-by-year variation.
Can CAGR be negative?
Yes. CAGR is negative when the ending value is below the beginning value. It represents the constant annual compounded decline that connects the two values.
Can I use CAGR for SIP returns?
Not accurately when multiple SIP instalments occur. Each instalment has a different investment date. Use XIRR with dated cash flows instead.
What is a good CAGR?
There is no universal good rate. Compare the result with a relevant benchmark, inflation, fees, taxes, time horizon and risk. A higher return often comes with higher uncertainty or loss risk.
Does CAGR include dividends?
Only if your ending value includes reinvested dividends or distributions. Use consistent total-return values when you want CAGR to reflect income.
What is the difference between CAGR and absolute return?
Absolute return measures the total percentage change for the whole period. CAGR converts the same start-to-end change into a compounded annual rate using the length of the period.
Does CAGR predict future returns?
No. Historical CAGR summarizes past endpoints. It does not capture volatility and does not guarantee the same rate will continue.
Financial disclaimer: This calculator provides educational estimates, not investment, tax, accounting or financial advice. Results use your inputs and do not account for every cash flow, fee, tax, dividend, currency change or risk. Past performance does not guarantee future results.