CAGR Calculator. One rate, honestly.
CAGR = (final value ÷ initial value)(1 ÷ years) − 1. Growing ₹1,00,000 into ₹2,50,000 over 5 years is a CAGR of 20.11%, even though the absolute return is 150%. At 20.11% money doubles in 3.78 years (the Rule of 72 guesses 3.58). If the final value is lower than the initial, the CAGR is simply negative, and this calculator shows it correctly instead of returning an error.
CAGR Calculator
t is the holding period in years: 5 years = 5.00 years. Absolute return is a different sum entirely: (₹2,50,000 − ₹1,00,000) ÷ ₹1,00,000 = 150.00%, with no reference to time at all.
| Point in time | Smoothed value | Total growth |
|---|---|---|
| Year 0 | ₹1,00,000 | 0.00% |
| Year 1 | ₹1,20,112 | 20.11% |
| Year 2 | ₹1,44,270 | 44.27% |
| Year 3 | ₹1,73,286 | 73.29% |
| Year 4 | ₹2,08,138 | 108.14% |
| Year 5 | ₹2,50,000 | 150.00% |
This is a straight line dressed up as growth. CAGR back-solves the one constant rate that connects your start point to your end point, so the table shows the path your money would have taken had every year been identical. The real path almost certainly was not: a fund that returned +45%, −18%, +30%, −6% and +26% can land on exactly the same 20.11% and feel nothing like this table on the way there.
| CAGR | ₹1 lakh becomes | Multiple |
|---|---|---|
| 6% | ₹1,79,085 | 1.79× |
| 8% | ₹2,15,892 | 2.16× |
| 10% | ₹2,59,374 | 2.59× |
| 12% | ₹3,10,585 | 3.11× |
| 15% | ₹4,04,556 | 4.05× |
Six percentage points separate the first row from the last, yet after ten years the gap is more than ₹2.25 L. That is why a couple of points of expense ratio or a few years of delay matter far more than they look on a single-year view.
CAGR calculator FAQ.
What is the difference between CAGR and absolute return?▾
Absolute return is the total percentage change from start to finish: (final − initial) ÷ initial. It ignores time completely, so a 150% gain looks identical whether it took five years or fifteen. CAGR converts that same gain into a per-year compounded rate, which is why it is the fairer way to compare investments held for different lengths of time. Growing ₹1,00,000 to ₹2,50,000 is 150% absolute either way, but it is a 20.11% CAGR over five years and only 6.30% over fifteen. Always ask for the holding period before you are impressed by an absolute number.
When should I use XIRR instead of CAGR?▾
Use CAGR only when there is one investment at the start and one value at the end. The moment money goes in or out midway (a SIP, a top-up, a partial redemption, a dividend withdrawn), CAGR breaks, because each rupee has been invested for a different length of time. XIRR (extended internal rate of return) solves for the single annualised rate that makes all those dated cash flows net to zero, so it weights every instalment by how long it actually stayed invested. For a monthly SIP, CAGR computed on total invested versus final corpus badly understates the real return. Use XIRR there.
What CAGR is realistic for Indian equity over the long run?▾
Broad Indian equity indices have delivered roughly 11% to 13% a year in rupee terms over multi-decade periods, with the Sensex and Nifty total-return series landing in that band depending on the exact start and end dates you pick. That is a nominal figure: after 5% to 6% inflation, the real compounding is closer to 6% to 7%. Two cautions matter. First, start-date sensitivity is severe. Shifting the window by two years can move the answer by several points. Second, past returns are a record, not a forecast; nothing obliges the next twenty years to resemble the last twenty.
Why does CAGR hide volatility and drawdowns?▾
CAGR is a back-solved constant. It takes only two numbers (where you started and where you ended) and reports the single smooth rate that connects them, discarding everything in between. Two portfolios that both compounded at 12% can have had wildly different journeys: one drifting steadily upward, the other losing 45% in a single year before recovering. The investor in the second one may well have sold at the bottom and never earned that 12% at all. To see risk you need other measures: standard deviation, maximum drawdown, and the worst rolling one-year and three-year returns.
How accurate is the Rule of 72?▾
The Rule of 72 estimates doubling time by dividing 72 by the annual growth rate, and it is a genuinely good mental shortcut in the 6% to 10% range, where it lands within about one percent of the exact answer. Accuracy falls away at the extremes. At 20.11%, the rule suggests 3.58 years while the exact figure, ln(2) ÷ ln(1 + r), is 3.78 years, an error of over two months. At very low rates it drifts the other way. Treat it as a sanity check you can do in your head, never as the number you put in a plan.