There is no single answer. Compare like with like: the same kind of investment over the same years. The calculator works out the rate; it does not judge it.

Should I look at CAGR or absolute return?

Both, for different things. Absolute return is the total growth; CAGR turns it into a yearly rate, so investments held for different periods can be compared.

Can CAGR be negative?

Yes. If the ending value is below the starting value, the CAGR is negative: ₹1,00,000 to ₹80,000 in 2 years is −10.56% a year.

How is CAGR different from XIRR?

CAGR uses one starting and one ending amount. XIRR handles many amounts on different dates, such as SIP instalments, which is why fund statements show XIRR for SIPs.

Does CAGR include dividends?

Only if the ending value includes them. A growth option or a total return figure already does; dividends paid out to you have to be added to the ending value.

CAGR Calculator: Compound Annual Growth Rate of an Investment

Type what you started with, what it became and the years in between. Get the yearly growth rate, the absolute return and the multiple.

How to use it

Type the starting value, the ending value and the number of years between them; part years such as 2.5 work too. You get the CAGR, the absolute return, the gain in rupees and how many times the money grew, with a chart and a table of the smooth path at that rate.

The formula

CAGR = (ending value ÷ starting value)^(1 ÷ years) − 1

CAGR (compound annual growth rate) is the single yearly rate that would take the starting value to the ending value if it grew at the same pace every year. It describes what happened. It says nothing about the next year.

Worked example

₹1,00,000 became ₹3,10,585 in 10 years.

Ending ÷ starting = 3.10585.
3.10585^(1 ÷ 10) = 1.12.
CAGR = 1.12 − 1 = 12% a year.

The absolute return is (₹3,10,585 − ₹1,00,000) ÷ ₹1,00,000 = 210.59%, and the money grew 3.11 times. Dividing 210.59% by 10 gives 21% a year, which overstates it, because it ignores compounding: each year’s growth is on a bigger amount than the year before. The CAGR of 12% is the honest yearly figure.

CAGR against absolute return

Absolute return says how much the money grew in total, but not how long it took. The same 210.59% over 3 years would be a CAGR of 45.9% a year; over 10 years it is 12%. To compare two investments held for different periods, compare their CAGRs, not their absolute returns.

CAGR against XIRR

CAGR works for one amount in and one amount out. A SIP has many amounts going in on many dates, so CAGR does not fit it; fund statements use XIRR instead, which works out a yearly rate from every date and amount. For a single lumpsum held the whole time, XIRR and CAGR come to the same number.

Where CAGR misleads

It hides the ride. A 12% CAGR can come from years of +40% and −20% as easily as from a steady climb. The chart shows the smooth path; the real one went up and down.
Short periods exaggerate. A 30% gain in six months is a CAGR of 69% a year, a pace the next six months may not repeat.
It can be negative. ₹1,00,000 that became ₹80,000 in 2 years has a CAGR of −10.56% a year, while the total loss is 20%.
Dividends count only if included. If dividends were paid out to you along the way, add them to the ending value to see the full growth.

To go the other way, from a rate to an amount, use the lumpsum calculator; for monthly investments, the SIP calculator.

Questions people ask

What is a good CAGR?: There is no single answer. Compare like with like: the same kind of investment over the same years. The calculator works out the rate; it does not judge it.
Should I look at CAGR or absolute return?: Both, for different things. Absolute return is the total growth; CAGR turns it into a yearly rate, so investments held for different periods can be compared.
Can CAGR be negative?: Yes. If the ending value is below the starting value, the CAGR is negative: ₹1,00,000 to ₹80,000 in 2 years is −10.56% a year.
How is CAGR different from XIRR?: CAGR uses one starting and one ending amount. XIRR handles many amounts on different dates, such as SIP instalments, which is why fund statements show XIRR for SIPs.
Does CAGR include dividends?: Only if the ending value includes them. A growth option or a total return figure already does; dividends paid out to you have to be added to the ending value.

CAGR calculator