₹1 lakh to ₹2.5 lakh in 6 years
2.5^(1/6) − 1 = 16.5% a year. The total gain of 150% sounds bigger, but the yearly rate is the one to compare with other investments.
CAGR calculator
100 thousand
250 thousand
CAGR
13.99%
A steady 13.99% a year turns $100,000 into $250,000 in 7 years.
- Total change
- 150%
- Gain
- $150,000
Reading a CAGR correctly
CAGR answers one question: what steady yearly rate would turn the starting value into the ending value over this many years? It smooths out the path. An investment that went up 40%, fell 20%, then went up 25% has the same CAGR as one that grew 11.9% every year, because both end at 1.4 times the start.
That makes CAGR good for comparing two things over the same period, such as a fund against its index or this year's revenue against five years ago. It does not work when money was added or taken out along the way. A monthly SIP has money that was invested for very different lengths of time, so use XIRR in the mutual fund returns calculator instead. If you know the rate and want the end value, the lumpsum calculator and the compound interest calculator work the other way round.
CAGR is also different from the average of yearly returns. A gain of 50% followed by a loss of 50% averages 0%, but you end with 75% of what you started with, a CAGR of −13.4%. A quick check is the rule of 72: divide 72 by the rate to get roughly how many years money takes to double. To strip out rising prices, take the inflation rate off the CAGR to get the real return. For a quick percentage difference, use percentage change.
Sources
What this calculator does not account for
- The ups and downs in between; CAGR is a smoothed average.
- Money added or taken out during the period — use XIRR for that.
How this is calculated
Formula: Compound annual growth rate
CAGR =(end ÷ start)^(1 ÷ years) − 1What the symbols mean
- yearsCan be a fraction, for example 2.5 for two and a half years.
Good to know
- For a SIP, CAGR overstates the time money was invested. The mutual fund returns calculator shows XIRR instead.
Read the full methodologyFound an error? Contact us
Worked examples
Each example is worked out by the same code as the calculator above.
A part year
₹1,20,000 grew to ₹1,80,000 in 3 years and 6 months. Use 3.5 years: 1.5^(1/3.5) − 1 = 12.3% a year.
Embed this calculator
The frame shows the tool only.
<iframe src="/embed/cagr" title="CAGR" width="100%" height="720" style="border:0;max-width:42rem" loading="lazy"></iframe>Questions
What is a good CAGR?
It depends on the asset. Broad stock indexes have returned around 10–12% a year over long periods, but past returns are not a promise.
CAGR vs absolute return?
Absolute return is the total change. CAGR spreads it over the years, so 100% over 5 years is about 14.9% a year.
Can CAGR be negative?
Yes, when the end value is below the start.
What is the difference between CAGR and XIRR?
CAGR uses one start value and one end value. XIRR allows money in and out on different dates, so it is the right measure for a SIP or any regular investing.
Why is my CAGR lower than the average yearly return?
Losses hurt more than gains of the same size help. +50% then −50% averages 0% but leaves you down 25%, a CAGR of −13.4%.
How long does it take to double money at 12% CAGR?
About 6 years: 72 ÷ 12 = 6. The exact answer is 6.1 years.