Learn/Calculators/Returns and compounding
CAGR calculator: the steady yearly rate.
Enter where an investment started, where it ended and how long it took. The CAGR is the one steady yearly rate that connects the two.
- Formula shown
- Free, nothing stored
- Share your result as a link
- Path at the CAGR
01How it works
In plain words.
Divide the end value by the start value to get the multiple, then take the root for the number of years. That root is one plus the CAGR. It is the return you would have needed every single year to get the same result.
The formula
CAGR = (End / Start)^(1 / years) - 1Absolute return = End / Start - 102Worked example
The default numbers, by hand.
Rs 1 lakh became Rs 2.5 lakh in 5 years: 2.5^(1/5) = 1.2011, so the CAGR is 20.1% a year, against an absolute return of 150%.
| Input | Value |
|---|---|
| Start value | ₹1,00,000 |
| End value | ₹2,50,000 |
| Years | 5 years |
| Result | Value |
|---|---|
| CAGR | 20.11% |
| Absolute return | 150.0% |
| Multiple | 2.50x |
| Money gained | ₹1.50 L |
03Key concepts
What to know before you use it.
CAGR hides the path
Two investments with the same CAGR can have travelled very differently: one smoothly, one through a 40% fall and back. The drawdown and Sharpe calculators show the part CAGR leaves out.
CAGR or XIRR
CAGR suits one amount in and one amount out. When money goes in and out on several dates, as with a SIP, use XIRR.
Good to know
- Always state the period with a CAGR: 20% over 2 years and 20% over 15 years are very different claims.
- RupeeCase figures are labelled model, back tested, with their dates; a CAGR without a date or a label tells you little.
04Assumptions
What the calculator assumes.
- One amount in at the start, one value at the end; no flows in between.
05Questions
Asked about the CAGR calculator.
How do you calculate CAGR?
CAGR = (end value / start value)^(1 / number of years) - 1. Rs 1 lakh to Rs 2.5 lakh in 5 years is a CAGR of 20.1%.
What is a good CAGR?
It depends on the asset and the risk taken. Compare a CAGR with a benchmark over the same dates, and look at the drawdown on the way.
Can CAGR be negative?
Yes. If the end value is below the start value, the CAGR is negative.
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06Keep going
Learn the idea, see it applied.
More returns and compounding calculators
Education only, not investment advice. RupeeCase is a technology platform operated by QC Alpha Technologies Pvt Ltd; it is not a fund, a PMS or a SEBI registered investment adviser. Model returns are back tested and not a promise of future returns. Figures carry the date they were checked.