Measuring investment performance is crucial, and that’s where a CAGR (Compound Annual Growth Rate) calculator comes in. It helps you determine the annual growth rate of your investments, smoothing out short-term fluctuations. By using a CAGR calculator, you can compare different investment options and make informed decisions about where to put your money for steady growth.
Table of Contents
“Quickly calculate the Compound Annual Growth Rate of your investments with our CAGR Calculator.This calculator is generally used to compare the growth rate of two different mutual funds”
How to use CAGR Calculator?
Suppose you invested ₹1,00,000 in a mutual fund, and after 6 years, it has grown to ₹2,00,000. To find out what annual return (CAGR) you earned over those 6 years, enter the following:
- Initial Investment (Beginning Value): ₹1,00,000
- Final Value: ₹2,00,000
- Investment Duration: 6 years
The calculator will instantly show your **Compound Annual Growth Rate (CAGR)** — the average yearly return your investment earned during the specified period.
This is helpful when you want to assess the performance of a mutual fund or compare returns across different investment options over time.
This calculator helps you measure the average annual return earned by your investment over a specific time period, assuming compounding. It’s a useful metric to evaluate the performance of mutual funds, stocks, or any asset that grows over multiple years.
Formula used in this Calculator? With explanation
The calculator uses the standard CAGR formula:
CAGR = (Final Value / Beginning Value)1 / n – 1
- Beginning Value: Your initial investment
- Final Value: The amount you received at the end of the period
- n: Number of years the investment was held
This formula smooths out the returns over the entire investment period, ignoring short-term volatility. The result is expressed as a percentage and reflects your average annual growth rate.
Understanding the benefits:
CAGR is a powerful tool for long-term investors. It shows how consistently an investment has grown over time — as if it grew at the same rate every year. This makes it easier to compare various mutual funds, stocks, or portfolio returns, regardless of market ups and downs.
Unlike absolute return, which just compares starting and ending value, CAGR takes the time factor into account — making it more meaningful for goal-based or multi-year investments.
However, CAGR doesn’t show the full picture — it hides interim volatility. So while it’s great for comparison, always combine it with other metrics like standard deviation or rolling returns. For deeper analysis, consider consulting a qualified financial advisor.
Frequently Asked Questions (FAQ)
Q1. What is a CAGR calculator?
It calculates the Compound Annual Growth Rate, showing how much your investment grows annually.
Q2. Why is CAGR important?
It helps compare different investments on the basis of consistent annual growth.
Q3. Can CAGR be negative?
Yes, if the investment value falls over the period, the CAGR will be negative.
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Disclaimer:
The CAGR Calculator provided on this page is designed to serve as an educational and informational tool only. It is intended to help investors understand the potential growth of their investments based on certain assumptions, such as expected rate of return, investment duration, and contribution amount. Please note that the results shown by this calculator are estimates and should not be considered as guaranteed outcomes or financial advice.
Mutual fund and market-linked investments are subject to market risks, and the actual returns may differ due to factors such as market fluctuations, fund performance, inflation, or changes in government policies. Users are advised to consult a qualified financial advisor or planner before making any investment decisions. Neither this website nor the calculator assumes responsibility for financial losses or decisions made solely based on the calculator’s output.