Calculate Compound Annual Growth Rate for any investment. Compare returns across stocks, mutual funds, FDs and real estate.
CAGR (Compound Annual Growth Rate) is the average annual growth rate of an investment over a period longer than one year, assuming profits are reinvested. It smooths out volatility and gives a single growth rate, making it easier to compare different investments like mutual funds, stocks, or FDs.
CAGR = (Ending Value / Beginning Value)^(1/Number of Years) − 1. For example, if ₹1,00,000 grows to ₹1,50,000 in 3 years: CAGR = (1,50,000/1,00,000)^(1/3) − 1 = 14.47%. This means the investment grew at an average of 14.47% per year.
Absolute return is the total gain regardless of time: (Final − Initial) / Initial × 100. CAGR accounts for the time period and compounding. A 50% absolute return over 5 years equals only ~8.45% CAGR. CAGR is better for comparing investments of different durations.
It depends on the asset class. FDs typically offer 6–7% CAGR, debt mutual funds 7–9%, large-cap equity funds 10–14%, and small/mid-cap funds 12–18% over long periods. The Nifty 50 index has delivered roughly 11–13% CAGR over the last 20 years. Higher CAGR usually means higher risk.
No. CAGR measures past performance, not future results. Markets are volatile and past CAGR does not guarantee the same growth going forward. Use CAGR to evaluate historical performance and compare investments, but always consider risk, market conditions, and your financial goals before investing.