Updated June 2026

CAGR Calculator

Your mutual fund shows 5× returns over 10 years. Sounds amazing — until you see the inflation-adjusted CAGR tells a different story.

₹
₹
Yrs
CAGR

17.46%

Absolute Return

400.0%

Wealth Gained

₹4.00 L

Growth Multiple

5.00×

Investment Growth at 17.5% CAGR

₹0₹1.4L₹2.8L₹4.1L₹5.5L0Y2Y4Y6Y8Y10Y
Investment Value
Initial Investment

Year-wise Breakdown

11 years
YearValue
0₹1,00,000
1₹1,17,462
2₹1,37,973
3₹1,62,066
4₹1,90,365
5₹2,23,607
6₹2,62,653
7₹3,08,517
8₹3,62,390
9₹4,25,670
10₹5,00,000

What is CAGR and Why It Matters

CAGR (Compound Annual Growth Rate) is the single most useful metric for evaluating investment performance. It tells you: "If my investment grew at a steady rate every year, what would that rate be?"

The formula is simple: CAGR = (Final Value / Initial Value)1/n - 1, where n is the number of years. This smooths out year-to-year volatility and gives you a single comparable number.

CAGR vs Average Return: The Critical Difference

Mutual fund fact sheets often show "average annual return" which can be misleading. Here's why:

  • Year 1: +40%, Year 2: -20% → Average = 10%, but CAGR = 5.8%
  • ₹1,00,000 → ₹1,40,000 → ₹1,12,000 (you only made ₹12,000, not ₹20,000)

CAGR accounts for the compounding effect and shows you what actually happened to your money. Always use CAGR, not average return, when evaluating investments.

The Inflation Adjustment Nobody Shows You

A stock that went from ₹100 to ₹500 in 10 years has a CAGR of 17.5%. Impressive? Now adjust for 6% inflation:

  • Nominal CAGR: 17.5%
  • Real CAGR: (1.175 / 1.06) - 1 = 10.8%
  • ₹500 in 10 years buys what ₹279 buys today

Your "5× return" is really a "2.8× return" in purchasing power. Toggle the inflation adjustment in our calculator to see this reality for your investments.

Benchmark CAGRs for Indian Investors

Use these as reference points when evaluating your portfolio:

  • Nifty 50 (15-year CAGR): ~12-13%
  • Gold (15-year CAGR): ~9-10%
  • PPF (guaranteed): 7.1%
  • Bank FD (pre-tax): 6-7%
  • Inflation (CPI average): ~6%

Any investment consistently delivering real CAGR (after inflation) above 6% over 10+ years is doing well. The Nifty's real CAGR of ~6-7% is why equity is the primary wealth-building vehicle.

How to Use This CAGR Calculator

  1. Enter your initial investment value (what you invested)
  2. Enter the current or final value (what it's worth now)
  3. Set the time period in years
  4. Read your CAGR — this is your annualized compounded return
  5. Toggle inflation to see the real CAGR — what your growth actually means in today's rupees

When CAGR Doesn't Work

CAGR has limitations:

  • SIPs or multiple investments — use XIRR instead (CAGR assumes single lump sum)
  • Very short periods — 1-2 year CAGR is just point-to-point return
  • Comparing risk — two investments with same CAGR may have vastly different volatility

For SIP investors, CAGR tells you how the underlying asset grew, not how your staggered investments performed. Use our SIP Calculator for that.

Frequently Asked Questions

What is CAGR?
CAGR (Compound Annual Growth Rate) is the annualized rate of return that takes an investment from its initial value to its final value over a given period. Unlike absolute returns, CAGR smooths out volatility and gives you a single annual growth rate — making it easy to compare different investments across different time periods.
How is CAGR different from absolute return?
Absolute return is the total percentage gain: (Final - Initial) / Initial × 100. It doesn't account for time. A 100% absolute return sounds great, but if it took 10 years, the CAGR is only 7.2%. CAGR gives you the annualized figure, making it possible to compare a 3-year investment with a 10-year one on equal footing.
Is CAGR the same as average annual return?
No. Average return is the arithmetic mean of yearly returns. CAGR is the geometric mean — it accounts for compounding. Example: if a stock goes +50% in year 1 and -50% in year 2, the average return is 0%, but CAGR is -13.4% (₹100 → ₹150 → ₹75). CAGR reflects what actually happened to your money.
What is a good CAGR for equity investments in India?
Historically, the Nifty 50 has delivered a CAGR of 11-13% over 15-20 year periods. Active equity funds can deliver 14-18% CAGR over long periods. But after adjusting for inflation (6%), real CAGR drops to 5-12%. Any investment delivering 12%+ CAGR after inflation is exceptional.
Why should I adjust CAGR for inflation?
A ₹1L investment growing to ₹5L in 10 years (17.5% CAGR) looks impressive. But at 6% inflation, ₹5L in 10 years buys what ₹2.8L buys today. The real CAGR is ~10.8%, not 17.5%. Toggle inflation in our calculator to see what your growth actually means in purchasing power.
Can CAGR be negative?
Yes. If your final value is less than your initial investment, CAGR is negative. Example: investing ₹1L that becomes ₹80K over 3 years gives a CAGR of -7.2%. This clearly shows you're losing money on an annualized basis.
What are the limitations of CAGR?
CAGR doesn't show volatility or risk. Two investments can have the same CAGR but very different risk profiles — one might have steady 12% growth while another swings between -30% and +50%. CAGR also assumes a single lump-sum investment — for SIPs, use XIRR instead. CAGR works best for evaluating point-to-point performance of lump sums.
How do I use CAGR to set financial goals?
Use it backwards: if you need ₹1 Cr in 15 years and expect 12% CAGR, you need ₹18.3L today as a lump sum. Or use our SIP calculator to find the monthly amount needed. CAGR helps you validate whether your expected growth rate will actually get you to your goal.

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