CAGR Calculator: Compound Annual Growth Rate

About CAGR

1% Club's CAGR Calculator gives you this number instantly. Here's what it actually means, what it doesn't tell you, and how to judge whether it's good.

What Your CAGR Number Actually Means

CAGR takes how your money grew and smooths it into a single, steady annual rate, instead of the lumpy, uneven way it actually grew year to year. It's a more accurate read on performance than just looking at total growth, because it accounts for compounding.

CAGR Formula:

CAGR = ((Final Value / Initial Value) ^ (1 / Number of Years)) − 1

Worked Example:

₹2,000 grown to ₹5,000 over 5 years looks like 30% a year at first glance (₹600 gained per year on a ₹2,000 base). The actual CAGR is 20.11%, lower than the naive estimate, because compounding means less needs to happen each year to reach the same endpoint.

Used This for a SIP? You Might Need XIRR Instead

CAGR only works for a single lump-sum investment, one entry, one exit. If you invested through a SIP, with money going in at different times, the number you just got isn't accurate, XIRR is the right tool for that, since it can combine multiple periods of growth into one meaningful annualized figure.

Use CAGR for: a one-time, lump-sum investment
Use XIRR for: SIPs, or anything with repeated inflows and outflows

Why Your CAGR Looks Lower Than You Expected

This is the single most common surprise on this page. If you mentally calculated your return as total gain divided by years, and the CAGR above came out lower, that's not an error.

Absolute return is the simple percentage gain, no time factor. ₹10,000 growing to ₹20,000 is a 100% absolute return, whether it took 2 years or 20. CAGR accounts for how long it actually took, the same growth over 4 years works out to 18.92% CAGR.

Absolute return tells you how much you gained. CAGR tells you how fast. They're answering different questions, not disagreeing with each other.

Is Your CAGR Result Good?

Depends what you’re measuring.

For your investments

Above 10% is a solid general benchmark for most investments
Equity investments: 15–30% is often viewed as strong
Fixed-income instruments: 8–12% is generally considered good, judged against a lower bar since they’re lower-risk

For a business

Sales revenue: 5–10% is reasonable
A company over five years old: 10–20% is strong
IT sector: often benchmarked closer to 20%
E-commerce: often benchmarked closer to 15%

None of these are fixed rules: the right comparison always depends on what else was available at that same risk level, over that same period.

Using This for a Mutual Fund? Here’s What Your Number Means

CAGR is one of the most common ways mutual fund performance gets reported, and for good reason: it strips out the fund’s ups and downs and gives you one steady annual number to judge it by.

Example: ₹2 lakh invested in 2015, withdrawn as ₹2.5 lakh three years later, works out to a CAGR of 7.72%.

The formula doesn’t change whether you’re evaluating a stock, a fund, or a whole portfolio, only what you plug into it does.

What Your CAGR Number Won’t Show You

CAGR is smoothed by design. It shows the steady rate that would have produced your result, not the actual bumpy path it took to get there. Two investments can share an identical CAGR while one had a calm climb and the other had wild swings along the way. Your number alone can’t tell you which of those happened: it’s a useful summary, not a complete risk picture.

How the 1% Club CAGR Calculator Works

Enter your initial investment
Enter the final value it grew to
Enter the number of years between the two

You’ll get your CAGR, total gains, and absolute return together, so you can see all three side by side instead of working them out separately.

Frequently Asked Questions

Everything you want to know

How do I calculate CAGR?

CAGR = ((Final Value / Initial Value) ^ (1/t)) − 1, where t is the number of years. Enter your numbers into the calculator above for an instant result.

Is 12% CAGR good?

It depends on what you’re measuring. For fixed-income instruments, 12% would be considered strong, above the typical 8–12% range. For equity investments, it’s on the lower end of what’s generally considered good (equity is often benchmarked against 15–30%). There’s no single answer without knowing what kind of investment it is.

Is 30% CAGR good?

Yes, 30% sits at the top end of what’s typically considered strong for equity investments. One caveat worth knowing: very high CAGR over a short period can be misleading: a small starting base can produce a dramatic-looking percentage. It’s worth checking the actual duration and starting amount before treating a 30% figure as representative of long-term performance.

How do I calculate CAGR for 20 years?

The same formula applies regardless of duration: you’re just using 20 as your value for t. CAGR = ((Final Value / Initial Value) ^ (1/20)) − 1. Longer durations tend to produce smoother, more meaningful CAGR figures than short ones, since they average out more of the year-to-year noise.

Which is better, CAGR or XIRR?

Neither is universally better. As a quick rule: one lump-sum entry and exit, use CAGR. A SIP or any repeated inflows and outflows, use XIRR instead.

Is CAGR better than ROI?

They’re not really comparable. ROI (like absolute return) ignores time entirely; CAGR annualises it. Want your total gain? Check ROI. Want to know how fast your money grew each year? That’s exactly what your CAGR number above is already showing you.