What is CAGR and how is it calculated?

CAGR (Compound Annual Growth Rate) is the rate at which an investment would have grown if it grew at a steady rate annually. Formula: CAGR = (Ending Value ÷ Beginning Value)^(1 ÷ Years) − 1. Example: $10,000 grows to $18,000 over 6 years. CAGR = (18000÷10000)^(1/6) − 1 = 1.8^0.1667 − 1 = 10.3% per year.

What is a good CAGR for investments?

A good CAGR depends on the asset class. For large-cap US stocks (S&P 500), the historical CAGR is approximately 10% per year. For real estate, 7–8%. For bonds, 3–5%. For a diversified portfolio, 7–9% is considered good. Individual stocks or funds beating 15% CAGR consistently over 10+ years are exceptional.

What is the difference between CAGR and absolute return?

Absolute return is the total percentage gain without accounting for time. CAGR annualizes that gain. Example: investment grows from $10,000 to $20,000 over 10 years. Absolute return = 100%. CAGR = (2)^(1/10) − 1 = 7.18% per year. CAGR is more useful for comparing investments held over different time periods.

What is the difference between CAGR and XIRR?

CAGR assumes a single lump sum invested at the start. XIRR (Extended Internal Rate of Return) accounts for multiple cash flows at irregular intervals — like monthly SIP investments. For lump sum investments, CAGR and XIRR give the same result. For SIPs or investments with multiple buy/sell dates, always use XIRR.

CAGR Calculator India 2025-26

📈 Calculate CAGR

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Investment Period 5 years

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Investment vs Growth

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Year	Value	Growth

🔄 Reverse CAGR — Find Future Value

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Expected CAGR 12%

Investment Period 10 years

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CAGR

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🎯 Target — Find Required CAGR

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Time Available 10 years

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📊 Is this achievable?

Frequently Asked Questions

What is CAGR?+

CAGR stands for Compound Annual Growth Rate. It is the rate at which an investment grows from its initial value to its final value over a period of time, assuming profits are reinvested each year. It smoothens out year-to-year volatility and gives a single annual growth rate.

CAGR formula — how is it calculated?+

CAGR = (Final Value / Initial Value) ^ (1 / Number of Years) − 1. For example, if ₹1 lakh grows to ₹2.5 lakh in 5 years, CAGR = (2,50,000 / 1,00,000)^(1/5) − 1 = 20.11% per year.

What is a good CAGR for mutual funds in India?+

A CAGR of 12–15% is considered good for equity mutual funds in India over a long term (10+ years). Large-cap funds typically return 10–13%, mid-cap 13–16%, and small-cap 15–20% over long periods. Nifty 50 has delivered approximately 12–14% CAGR over the last 20 years.

Difference between CAGR and absolute return?+

Absolute return is the total percentage gain without considering the time period. If ₹1 lakh becomes ₹2 lakh, the absolute return is 100% regardless of whether it took 1 year or 10 years. CAGR adjusts for the time period — the same investment over 10 years would be a CAGR of 7.18% per year.

Can CAGR be used for SIP returns?+

No — CAGR is for lump sum investments where you invest once and measure growth. For SIP (Systematic Investment Plan) with regular monthly investments, XIRR (Extended Internal Rate of Return) is the correct metric. Use our SIP Calculator for accurate SIP return calculations.

What is Nifty 50 historical CAGR?+

Nifty 50 has delivered approximately 11–14% CAGR since its inception in 1996. Over the last 10 years (2014–2024), it returned around 13–14% CAGR. Sensex has delivered similar returns historically, making Indian equities one of the best long-term wealth creators globally.

📊 CAGR Benchmarks India

Savings Account3–4%

Fixed Deposit (5yr)6.5–7.5%

PPF (Current)7.1%

Nifty 50 (10yr avg)13–14%

Large Cap MF11–14%

Mid Cap MF14–17%

Small Cap MF15–20%

Real Estate (metro)7–12%

Gold (10yr avg)10–12%

🔢 Rule of 72

Divide 72 by your CAGR to find how many years it takes to double your money.

At 6% CAGRDoubles in 12 years

At 10% CAGRDoubles in 7.2 years

At 12% CAGRDoubles in 6 years

At 15% CAGRDoubles in 4.8 years

At 20% CAGRDoubles in 3.6 years

📌 Related Calculators

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CAGR Calculator 2026 — What is CAGR, Formula & How to Use It

CAGR (Compound Annual Growth Rate) is the single most useful metric for comparing investments, business revenue growth, and portfolio performance. It answers the question: at what steady annual rate did this investment actually grow? This calculator computes CAGR instantly and shows the year-by-year growth breakdown.

⚡ CAGR Quick Reference

Formula(End÷Start)^(1÷Years) − 1

$10K → $18K over 6 years10.3% CAGR

$10K → $20K over 10 years7.18% CAGR

S&P 500 historical CAGR~10% per year

Good portfolio CAGR7–9% per year

Inflation CAGR (US, 20yr avg)~3% per year

Real return = CAGR minus inflation10% − 3% = 7% real

The CAGR Formula Explained

CAGR = (Ending Value ÷ Beginning Value)^(1 ÷ Years) − 1

$10,000 grows to $18,000 over 6 years → (18000÷10000)^(1/6) − 1 = 1.8^0.1667 − 1 = 0.103 = 10.3% CAGR

CAGR vs Absolute Return vs XIRR

Absolute return — total % gain with no time factor. $10K→$20K = 100% absolute return. Simple but misleading across different time periods.
CAGR — annualised growth for a single lump sum. $10K→$20K over 10 years = 7.18% CAGR. Best for comparing lump sum investments.
XIRR — handles multiple cash flows at different dates (like monthly SIPs). Always use XIRR for SIP or staggered investments.

What is a Good CAGR?

US large-cap stocks (S&P 500) — ~10% historically
Diversified equity portfolio — 7–9% is solid
Real estate — 7–8% including rental income
Bonds / fixed income — 3–5%
Savings account — 1–5% (HYSA currently 4.5%+)
Inflation — ~3%, so real return = CAGR minus 3%

What is CAGR in simple terms?+

CAGR is the steady annual growth rate that would take your investment from its starting value to its ending value over a given period. It smooths out year-to-year volatility into one clean number. If your $10,000 investment is worth $18,000 after 6 years, the CAGR is 10.3% — meaning it grew as if it returned exactly 10.3% every single year.

What is the difference between CAGR and average return?+

Average return (arithmetic mean) simply averages year-by-year returns. CAGR (geometric mean) accounts for compounding and is always lower than the arithmetic average when returns vary. Example: +50% one year, -50% the next. Average = 0%, but actual CAGR = -13.4% (you end up with $75 from $100). CAGR is always the more accurate measure for investment performance.

CAGR Calculator India

CAGR Calculator 2026 — What is CAGR, Formula & How to Use It

The CAGR Formula Explained

CAGR vs Absolute Return vs XIRR

What is a Good CAGR?

Put CAGR to Work — Invest via Zerodha