CAGR Calculator
Calculate the Compound Annual Growth Rate (CAGR) of an investment given its initial value, final value, and the number of years held.
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Your result
14.87%
CAGR
AI explanation
Formula
CAGR = (Final Value / Initial Value)^(1/Years) − 1Worked example
₹1,00,000 grows to ₹2,00,000 over 5 years
| Field | Value |
|---|---|
| Initial investment value | 100000 |
| Final investment value | 200000 |
| Number of years | 5 |
| CAGR | 14.87 |
| Total growth over the period | 100 |
Assumptions
- Assumes smooth, consistent annual growth — actual year-to-year returns for the investment may have varied significantly even if CAGR is the same.
- Does not account for additional contributions or withdrawals during the period (use the SIP or Mutual Fund SIP calculators for regular-contribution scenarios).
Frequently asked questions
What does CAGR actually measure?
CAGR shows the constant annual growth rate that would take an investment from its initial value to its final value over the given period, smoothing out year-to-year volatility into a single average rate.
Why is CAGR lower than the average of yearly returns?
CAGR accounts for compounding, so it's typically lower than a simple average of yearly returns when returns are volatile — a large loss followed by an equal percentage gain doesn't fully recover the original value, which CAGR correctly reflects.
Can CAGR be negative?
Yes — if the final value is lower than the initial value, CAGR will be negative, reflecting an annualized rate of decline over the period.
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Sources
- Securities and Exchange Board of India — Investor Education — Securities and Exchange Board of India. Effective 01-01-2015, reviewed 12-09-2026.
This calculator provides a mathematical estimate for general educational use and does not constitute investment advice. Past growth rates do not guarantee future returns.
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