Find the smoothed, compounding annual growth rate between a starting and ending value — and see how it stacks up year by year against a simple average return.
Enter the starting value, ending value, and the time period between them.
Enter your details and hit calculate
Calculate to see how your value would grow each year at a constant CAGR.
CAGR (Compound Annual Growth Rate) measures the smoothed annual growth rate of an investment over a specified time period, assuming the gains are compounded every year. It is widely used to compare the performance of mutual funds, stocks, fixed deposits, business revenue, or any value that changes from a starting figure to an ending figure over multiple years, because it removes the noise of year-to-year volatility and expresses growth as a single, comparable percentage.
Unlike a simple average of annual returns, CAGR accounts for the compounding effect — meaning gains (or losses) in early years affect the base on which later years grow. This calculator shows both figures side by side so you can see exactly how much the compounding effect changes the picture: the simple average return is just the total growth percentage divided by the number of years, while CAGR is the constant rate that, compounded every year, would take you from the initial value to the final value.
CAGR is purely a backward-looking, smoothed metric — it tells you what constant annual rate would have produced the same overall growth, not the actual rate in any individual year. Real investments rarely grow at a perfectly steady rate; some years are up sharply, others are flat or negative. The year-wise implied growth table below shows what your investment's value would look like at the end of each year if it had, hypothetically, grown at exactly the CAGR every single year — a useful way to visualize the smoothed path CAGR represents.
CAGR is most useful for comparing two or more investments with different volatility patterns on a like-for-like basis, or for judging whether a fund's long-term track record is actually attractive once the compounding is accounted for. It is not a guarantee of future performance and should not be confused with a fixed, risk-free rate of return.
Worked example: Suppose you invested ₹1,00,000 in a mutual fund and after 5 years it grew to ₹2,50,000. The CAGR is calculated as [(2,50,000 / 1,00,000)^(1/5) − 1] × 100 ≈ 20.11%. Note that the simple average return here would be (150% total growth ÷ 5 years) = 30% per year — noticeably higher than the true CAGR of 20.11%, which is exactly why CAGR, not a simple average, is the industry-standard way to describe annualized performance.
Reference: This calculator uses the standard CAGR formula used across the mutual fund and equity research industry, including brokerage and AMC investor-education tools. For educational use only; does not constitute investment advice.
A simple average just divides total growth by the number of years and ignores compounding. CAGR instead finds the single constant rate that, compounded year after year, turns your initial value into your final value. Because compounding effects build on each other, the simple average is almost always higher than CAGR for the same pair of numbers — this calculator shows both so the gap is easy to see.
Real investments rarely grow at a perfectly steady rate every year. This table simulates what your value would be at the end of each year if it had grown at exactly the calculated CAGR every single year — it's a smoothed, hypothetical path, not your actual historical year-by-year performance, but it helps visualize what the CAGR percentage really represents.
Yes. If your final value is lower than your initial value, the CAGR formula returns a negative percentage, representing an average annual decline over the period. The calculator handles this the same way — the formula only requires the initial value and time period to be greater than zero.
No. CAGR is a smoothed, backward-looking average — it tells you the constant rate that would have produced the same overall growth, not what actually happened year to year. An investment could have a strong CAGR while individual years were volatile, including years with losses.
This depends heavily on the asset class, time period, and risk taken. There's no universal benchmark — a "good" CAGR for a low-risk debt fund looks very different from a "good" CAGR for an equity fund. CAGR is best used to compare similar investments over the same period, or to compare a fund against its relevant benchmark index, rather than against an arbitrary fixed number.