How does CAGR differ from XIRR and IRR?

CAGR is used strictly for point-to-point (lump sum) calculations with a single initial investment and a single final value. IRR and XIRR are used for complex transactions with multiple cash flows at regular or irregular intervals, such as mutual fund SIPs.

What is a good CAGR for stock market and mutual funds in India?

Historically, the broader Nifty 50 index in India has delivered an annualized CAGR of 12% to 14% over a 10-year period. A long-term CAGR of 12% to 15% is generally considered excellent for active mutual funds and stock portfolios.

Compounding & Growth Analytics

CAGR Calculator – Compound Annual Growth Rate

Q: What is CAGR and how is it calculated?

CAGR, or Compound Annual Growth Rate, measures the constant rate at which an investment grows annually over a specified time period, assuming the gains compound. It is calculated as: CAGR = (Ending Value / Beginning Value)^(1 / Years) - 1.

Q: What is the difference between CAGR and Absolute Return?

Absolute return measures the total percentage gain or loss of an investment without considering the holding duration. CAGR converts this growth into an annualized average rate, accounting for the effect of time and compounding, making it better for long-term evaluations.

Q: Can I use CAGR for Systematic Investment Plans (SIP)?

No, CAGR is mathematically designed for single one-time lump sum investments. Because SIPs involve staggered monthly cash flows, you must use XIRR (Extended Internal Rate of Return) to get an accurate representation of your annualized returns.

Compute precise Compound Annual Growth Rate (CAGR), project future investment wealth, calculate reverse CAGR, and estimate growth duration for mutual funds and equities.

Calculated CAGR -

Compound Annual Growth Rate

Beginning Value (Initial Investment) ₹1,00,000

Ending Value (Final Accumulated Amount) ₹2,50,000

Time Duration (Years) 5.0 Years

Initial Investment Amount ₹1,00,000

Expected Annual CAGR (%) 15.0%

Holding Period (Years) 10.0 Years

Target Future Corpus ₹10,00,000

Expected Annual CAGR (%) 12.0%

Time Horizon (Years) 10.0 Years

Initial Investment Amount ₹1,00,000

Target Future Value ₹5,00,000

Expected Annual CAGR (%) 15.0%

Annualized CAGR-

Total Wealth Gain

Absolute Return

Growth Multiplier

Compounding Trajectory Exponential Curve

What is Compound Annual Growth Rate (CAGR)?

The Compound Annual Growth Rate (CAGR) is the mean annual growth rate of an investment over a specified period of time longer than one year. It represents the geometric progression ratio that provides a constant rate of return, smoothing out market volatility and showing what an investment yielded on an annually compounded basis.

The Mathematical CAGR Formula

The standard formula is: CAGR = (Ending Value / Beginning Value)^(1 / Years) - 1.

What is CAGR and how is it calculated?

CAGR measures the constant rate at which an investment grows annually over a specified time period, assuming the gains compound. It is calculated as: CAGR = (Ending Value / Beginning Value)^(1 / Years) - 1.

What is the difference between CAGR and Absolute Return?

Absolute return measures total gain or loss without considering time duration. CAGR converts this growth into an annualized average rate, accounting for the effect of compounding over years.

Can I use CAGR for Systematic Investment Plans (SIP)?

No, CAGR is mathematically designed for single point-to-point lump sum investments. For staggered periodic cash flows like monthly SIPs, you must use XIRR (Extended Internal Rate of Return).