What is CAGR?

CAGR stands for compound annual growth rate. It is the steady yearly rate that would take an investment from its starting value to its ending value over a given period. The formula is:

CAGR = (Final Value ÷ Starting Value)^(1 ÷ years) − 1

CAGR smooths a bumpy journey into one comparable number. That is why it is the standard way mutual funds, stocks and businesses report growth over several years.

A Simple Example

Suppose ₹1 lakh grew to ₹2.5 lakh in 8 years. The CAGR works out to about 12.1% a year, even if the actual journey included a crash and a boom along the way. That comparability is the whole point: you can line up an FD, a mutual fund and a property purchase on the same yardstick.

What CAGR Cannot Tell You

CAGR has three blind spots worth knowing. It hides volatility, so two investments with identical CAGR can carry very different risk. It assumes one investment and one exit, so for SIPs or any series of cash flows XIRR is the applicable measure instead — knowing when each measure applies saves you from comparing the wrong numbers. And the start and end dates matter enormously: a CAGR measured from a market bottom will always look flattering.

Benchmarks to Judge Any CAGR Against

A CAGR number only means something next to the alternatives. Indian consumer inflation has averaged roughly 4% to 6% over long periods. Government-backed small savings schemes currently pay 6.7% to 8.2% (Q2 FY 2026-27). Long-run Indian equity index returns have historically landed in the low teens, with sharp interruptions. So a "9% CAGR" property story stops looking special once you subtract maintenance, taxes and the difficulty of selling. Whenever someone quotes you a CAGR, ask three things: over what period, from what starting point, and compared with what alternative.

Two More Ways to Use This Calculator

You can run it in reverse for goal planning: enter today's savings as the start value and your goal as the end value, and the required CAGR tells you whether the goal is reachable with guaranteed instruments or needs equity risk. It is also handy for checking claims. "Money doubled in 5 years" is a 14.9% CAGR. "Tripled in 10 years" is 11.6%. The calculator makes marketing arithmetic transparent in seconds.

FAQs about CAGR Calculator

CAGR = (final value ÷ initial value) raised to the power of 1 ÷ years, minus 1. For ₹1,00,000 growing to ₹2,00,000 in 6 years: (2)^(1/6) − 1 ≈ 12.2% a year.
Context decides: it should be judged against inflation (~4–6% in India historically), risk-free rates (roughly 6.5–7% on government-backed schemes as of mid-2026) and the risk taken. Double-digit CAGR over long periods generally requires equity-like risk.
No. A simple average of yearly returns overstates growth when returns fluctuate. CAGR is the geometric rate that reflects what compounding actually delivered.
Not directly — SIP instalments are invested on different dates. Use XIRR for SIPs; CAGR suits single lumpsum comparisons.
Doubling in 5 years ≈ 14.9% a year; in 7 years ≈ 10.4%; in 10 years ≈ 7.2%. Tripling in 10 years ≈ 11.6%. Reverse-checking claims this way instantly exposes exaggerated pitches.
Compare like with like. Published fund and index CAGRs are pre-tax; FD rates are pre-tax too but taxed yearly at slab, while equity gains are taxed only at redemption at concessional rates — so two equal pre-tax CAGRs can differ meaningfully after tax.