CAGR Calculator
Free online CAGR calculator to determine the compound annual growth rate of your stock, mutual fund, or business investments. Calculate annualised returns effortlessly with ATS.
Key takeaways
- CAGR represents the smoothed annual growth rate over multi-year holding periods.
- Formula: CAGR = [(Final Value / Initial Value)^(1 / Years)] - 1.
- Unlike absolute returns, CAGR accounts for the compounding time value of money.
- Ideal for comparing mutual fund performance, stock CAGR, real estate, and business earnings.
About the CAGR Calculator
Compounded Annual Growth Rate (CAGR) is the standard metric used by investors and analysts to measure the annualised performance of an investment over time. Because market returns fluctuate unpredictably year to year, a simple average return creates an inaccurate impression of actual portfolio compounding. CAGR eliminates that distortion by calculating the constant annual rate needed to grow from initial value to final value.
Whether you are evaluating a stock holding over 5 years, analyzing a mutual fund scheme’s trailing performance, or projecting future business revenues, CAGR provides a direct, like-for-like comparison against benchmark indices like the NIFTY 50 and SENSEX.
Alongside the annualised CAGR percentage, the ATS calculator displays your total rupee capital gains and absolute percentage growth, giving you a complete picture of your investment performance.
| Return Metric | What it Measures | Best Used For |
|---|---|---|
| CAGR | Annualised compounding rate of return | Long-term investments held > 1 year |
| Absolute Return | Total percentage gain from start to finish | Short-term trades held < 1 year |
| XIRR | Internal rate of return on irregular cash flows | Mutual fund SIPs and staggered investments |
| Simple Annual Return | Arithmetic average of yearly returns | Basic comparisons (ignores compounding) |
Worked example
- Initial investment of ₹1,00,000 grows to ₹2,50,000 over 5 years.
- Growth ratio: ₹2,50,000 ÷ ₹1,00,000 = 2.5.
- Apply 5-year exponent: (2.5)^(1/5) = (2.5)^0.2 ≈ 1.2011.
- Subtract 1: 1.2011 - 1 = 0.2011 → 20.11% CAGR.
- Total gains: ₹1,50,000 | Absolute return: +150.00%.
Frequently Asked Questions
What is a CAGR calculator?
A CAGR calculator is a free financial tool that calculates the compound annual growth rate of an investment over multiple years, showing the steady annual rate of return needed to achieve the final value.
What is the formula to calculate CAGR?
The formula is: CAGR = [(Final Value / Initial Investment) ^ (1 / Number of Years)] - 1. Multiply the result by 100 to express it as a percentage.
How is CAGR different from Absolute Return?
Absolute return measures only total percentage gain regardless of time (e.g. 100% gain over 10 years). CAGR factors in the time duration, showing what the return equated to on a per-year compounded basis (e.g. 7.18% per year).
Can CAGR be negative?
Yes. If the final value of your investment is lower than your initial investment, the CAGR will be negative, representing an annualised loss.
Is CAGR suitable for SIP investments?
CAGR is designed for lump-sum investments. For periodic monthly SIP investments with varying cash flow dates, XIRR (Extended Internal Rate of Return) is the more accurate metric.
Is the ATS CAGR calculator free to use?
Yes. The ATS CAGR calculator is completely free, runs live in your browser, and requires no account or login.