About CAGR Calculator
CAGR (Compound Annual Growth Rate) is the most accurate way to measure the performance of an investment over time. Unlike absolute returns, which just show the total gain, CAGR smooths out the volatility and gives you a single annual growth rate.
Where is CAGR Used?
- Mutual Funds To compare performance against benchmarks over 3+ years.
- Stocks To analyze long-term returns compared to fixed deposits.
- Business Growth To measure revenue or profit growth trends.
- Portfolio Analysis To track overall wealth creation speed.
Benefits of Using CAGR
- Standardization Makes comparing Apple vs. Oranges (e.g., Gold vs. Stocks) easier.
- Volatility Smoothing Ignores the short-term ups and downs.
- Time Value Accounts for how long the money was invested.
How to use this calculator?
- Enter the initial amount you invested.
- Enter the current or final value of the investment.
- Select the duration in years using the slider.
- The calculator will instantly show you the annualized return percentage.
Frequently Asked Questions
What is a good CAGR?
A good CAGR depends on the asset class. For equity mutual funds, 12-15% is considered good over the long term. For safe assets like FDs, 6-7% is standard.
Is CAGR better than Absolute Return?
Yes, for investments older than 1 year. Absolute return doesn't account for time. 50% return in 1 year is amazing, but 50% return in 10 years is poor (approx 4% CAGR).
Can CAGR be negative?
Yes, if the final value is less than the initial value, the CAGR will be negative, indicating a loss.