How CAGR Calculator Works

The Compound Annual Growth Rate (CAGR) shows the mean annual growth rate of an investment over a specific period longer than one year. It assumes the investment has grown at a steady rate each year, which makes it a reliable metric to compare different investment options such as mutual funds, SIPs, stocks, or fixed deposits.

CAGR Formula

Example 1: Mutual Fund Investment

Let’s say you invested ₹1,00,000 in a mutual fund, and after 5 years the investment grew to ₹1,80,000.

Using the CAGR formula:
CAGR = ((1,80,000 / 1,00,000) ^ (1 / 5)) - 1 = 12.47%

This means your investment grew at an average annual rate of 12.47% per year over 5 years.

Example 2: Comparing Two Investments

Suppose you invested ₹1,00,000 in two different assets:

• Mutual Fund A → grew to ₹1,70,000 in 4 years
• Mutual Fund B → grew to ₹1,90,000 in 5 years

- CAGR of A = ((1,70,000 / 1,00,000) ^ (1/4)) - 1 = 14.25%
- CAGR of B = ((1,90,000 / 1,00,000) ^ (1/5)) - 1 = 13.67%

Even though Fund B gives higher total return, Fund A has a higher CAGR, meaning it grew faster annually.

Why CAGR Matters

• It helps compare performance of different investments objectively.
• It smooths out fluctuations and gives a consistent growth rate.
• It’s widely used by investors and financial analysts to measure portfolio performance.
• Helps in planning long-term wealth creation and evaluating investment strategies.

Key Inputs Explained

• Initial Investment: The starting amount you invested.
• Final Investment: The value of your investment after the holding period.
• Duration: Total investment period in years.

CAGR helps investors make data-driven decisions by showing true annualized returns instead of raw profit figures. Use this calculator to track your portfolio performance or compare multiple funds to choose the best one.