CAGR Calculator — Find Your True Annualised Return
CAGR (Compound Annual Growth Rate) is the single most important metric to evaluate any investment’s performance. Enter the initial value, final value, and number of years — this calculator instantly shows your true annualised return, cutting through the noise of absolute returns and misleading simple averages.
CAGR Calculator
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About the Author
Mithun Srivastava is the founder of InvestWithMithun.com, a free stock market education platform for Indian investors. With a passion for making finance accessible to everyone, Mithun creates practical guides, calculators, and glossary resources to help beginners start their investing journey with confidence.
What Is CAGR?
CAGR is the annual growth rate that, if compounded every year, would have taken your initial investment to its final value. It smooths out year-to-year volatility and gives you one clean number to compare investments.
If you invested ₹1 lakh and it became ₹2 lakh in 5 years, your CAGR is not 20% (simple average). It is 14.87% — because compounding at 14.87% for 5 years gives exactly 2x.
The CAGR Formula
CAGR = (Final Value ÷ Initial Value)^(1/n) − 1
Multiply by 100 to express as a percentage.
Example: Infosys Stock, 2015 to 2025
- Bought at: ₹500
- Sold at: ₹1,900
- Years: 10
- CAGR = (1900/500)^(1/10) − 1 = 14.3%
Your absolute return was 280%, but the annualised return was 14.3% — the correct way to compare against other opportunities.
Why CAGR Matters
- Apples-to-apples comparison — Compare FD (7.5%), equity (14%), and gold (8%) on the same scale
- Removes noise — A +50% year followed by -20% year does not average to +15%
- Used by all fund houses — Every mutual fund factsheet reports CAGR
- Goal planning math — If you need 12% CAGR for 20 years to reach ₹1 Cr, you know your number
Benchmarks — What Is a Good CAGR in India?
| Asset Class | 10-Year Historical CAGR |
|---|---|
| Large-cap equity | 11–13% |
| Mid-cap equity | 13–16% |
| Small-cap equity | 14–18% |
| Debt mutual funds | 6–8% |
| Gold | 9–11% |
| Real estate | 6–9% |
| Bank FD | 6–7% |
| PPF | 7–8% |
Common CAGR Mistakes
- Comparing CAGR over different time periods
- Ignoring fees — a 14% CAGR fund with 2% expense ratio is effectively 12%
- Ignoring dividends — always use total return CAGR
- Extrapolating short-term CAGR
- Using CAGR for SIPs (use XIRR instead)
Frequently Asked Questions
What is a good CAGR for investments?
In India, a 12% CAGR over 10+ years is considered good for equity mutual funds. 7% for debt/FD. Anything consistently above 15% for equity is exceptional.
Is CAGR the same as average return?
No. Average return is a simple arithmetic mean. CAGR is the geometric mean that accounts for compounding. Average return overstates actual performance when there is volatility.
Difference between CAGR and XIRR?
CAGR assumes one lump-sum investment. XIRR handles multiple cash flows on different dates — needed for SIPs and stepped investments.
Can CAGR be negative?
Yes. If final value is less than initial value, CAGR is negative — your investment compounded backwards.
How do I calculate CAGR in Excel?
Use: =(Final Value/Initial Value)^(1/Years)-1 or the RRI function: =RRI(Years, Initial Value, Final Value).
Why does my mutual fund show different returns?
Your fund likely uses XIRR because of SIP installments at different times. If you invested a single lumpsum, your CAGR should match.
Can I use CAGR to predict future returns?
No. CAGR is backward-looking. Past CAGR is not a guarantee of future CAGR.
What CAGR does Warren Buffett have?
Berkshire Hathaway has delivered approximately 20% CAGR over its 58-year history — roughly double the S&P 500.