CAGR Calculator — Know Your Real Return Rate
Find out the exact annual growth rate of any investment. Compare mutual funds, stocks, FDs and real estate on equal footing with Compound Annual Growth Rate.
What is CAGR and how is it calculated?
CAGR (Compound Annual Growth Rate) is the rate at which an investment grows each year assuming profits are reinvested. Formula: CAGR = (Final Value / Initial Value)^(1/Years) – 1. It smooths out volatile year-to-year returns into a single steady rate.
What is a good CAGR in India?
FD: 6.5-7.5%. PPF: 7.1%. Nifty 50 avg: 12-14% over 10+ years. Mid/small cap funds: 14-18%. Real estate: 8-12% in metro cities. Anything above 12% over 5+ years beats most benchmarks. Above 20% for 5+ years is exceptional.
What is the difference between CAGR and absolute return?
Absolute return is total % gain regardless of time: (FV-PV)/PV x 100. CAGR annualises this. A 100% absolute return over 10 years is only 7.2% CAGR. Use absolute return for short periods under 1 year; use CAGR for comparing investments held over different durations.
How does CAGR compare to XIRR?
CAGR assumes a single lumpsum investment held for the full period. XIRR is used for multiple cash flows at irregular intervals (like SIP investments). For lumpsum investments, CAGR and XIRR give the same result. For SIPs, always use XIRR to measure actual returns.
Why does CAGR not show volatility?
CAGR shows the smooth path from start to end, ignoring what happened in between. An investment could have dropped 50% in year 2 and recovered strongly, but CAGR would only show the net result. Always look at CAGR alongside standard deviation or max drawdown for a complete picture.