📈 CAGR Calculator

CAGR vs Absolute Return

Absolute return measures the total percentage change between the initial and final values.

CAGR annualizes that growth over the investment period and assumes a steady compounded rate for comparison purposes.

For example, a 100% total gain over 5 years corresponds to a CAGR of approximately 14.87%, assuming a single initial investment and a final value after five years.

There is no single CAGR that is appropriate for every investment. A useful comparison depends on the asset class, time period, risk level, fees, taxes, and the benchmark being used.

• Compare equity investments with an appropriate equity benchmark.
• Compare debt products with relevant interest-rate or debt benchmarks.
• Consider inflation when evaluating whether your money is gaining purchasing power.
• Do not treat a historical CAGR as a guaranteed future return.
• A higher CAGR is not automatically better if it required substantially higher risk.

1. Enter the amount of your initial lump-sum investment.
2. Enter the final or current value of the investment.
3. Enter the investment period in years.
4. Select Calculate CAGR.
5. Review CAGR, absolute return, profit, and investment duration.
6. Use the result as one part of your broader investment analysis.

Short-Term Savings

CAGR is generally less useful for very short holding periods because small changes in value can produce large annualized figures.

Fixed Deposits and Debt Investments

These investments are generally evaluated using stated interest rates, yields, maturity values, and applicable taxes. CAGR can still help when comparing realized investment values over a defined period.

Long-Term Equity Investments

CAGR can help summarize long-term growth, but it hides interim market declines and volatility. Equity performance should therefore be considered alongside risk and drawdowns.

Hybrid Portfolios

A blended portfolio may have a different return and risk profile from a pure equity or debt investment. Compare it with an appropriate benchmark and consider the portfolio's asset allocation.

• Starting and ending values: These determine the total growth used in the CAGR calculation.
• Investment period: The same total gain can produce a very different annualized rate over different time periods.
• Asset class: Different assets have different return and risk characteristics.
• Market conditions: Market cycles can significantly affect realized investment values.
• Costs and taxes: Fees, expenses, and taxes can reduce the amount ultimately retained by an investor.
• Cash flows: CAGR is designed for a starting value and ending value. Multiple deposits or withdrawals require a different return measure, such as XIRR.

• Use CAGR primarily for lump-sum investments with a clearly defined start and end value.
• Do not use CAGR alone to evaluate an investment decision.
• For investments with multiple cash flows, consider XIRR instead.
• Compare returns with a relevant benchmark and the same measurement period.
• Consider inflation when assessing long-term purchasing power.
• Review risk and volatility alongside the reported return.