About cagr calculator
Compound annual growth rate (CAGR) is the steady yearly rate at which an investment would have grown between two values. It smooths out ups and downs.
Formula
CAGR = (ending value ÷ starting value)^(1 ÷ years) − 1. An investment that grows from ₹1,00,000 to ₹2,00,000 in 6 years has a CAGR of about 12.2%.
Limits
CAGR hides volatility and ignores extra deposits or withdrawals. For a series of SIP instalments, use XIRR instead.
A worked example
An investment that grows from ₹1,00,000 to ₹1,80,000 in 5 years has a CAGR of (1.8)^(1/5) − 1, which is about 12.47 percent a year. Another that doubles in 7 years has a CAGR of about 10.4 percent.
Use it to compare
CAGR makes investments held for different periods comparable. For a monthly SIP or irregular deposits, look at XIRR, which accounts for the dates of each cash flow.
