Understand Compound Annual Growth Rate and measure long-term investment performance
Understanding the growth of your investments is essential for making smart financial decisions. Whether you invest in stocks, mutual funds, or business ventures, knowing how fast your investment grows over time is crucial.
The SmartDailyTools CAGR Calculator helps you calculate the Compound Annual Growth Rate quickly and accurately. Simply enter the initial value, final value, and investment period to get the average annual growth rate instantly.
CAGR represents the rate at which an investment would have grown if it had increased at a steady rate each year while profits were reinvested.
Unlike simple growth calculations, CAGR smooths out market volatility and gives a single annual growth percentage.
Where is CAGR commonly used?
The formula used to calculate CAGR is:
Many investors confuse CAGR with absolute return.
Absolute Return measures total gain without considering time.
Example: ₹1,00,000 → ₹1,50,000 = 50% return But this does not show how long it took.
CAGR shows annual growth rate.
A 50% return over 10 years equals roughly 4.14% CAGR.
CAGR works best for lump-sum investments where money is invested once.
Use CAGR for:
Use XIRR for:
What is considered a good CAGR?
In India, 12%–15% CAGR is considered strong for long-term equity investments.
Can CAGR be negative?
Yes. If final value is lower than initial value.
Why doesn’t CAGR show yearly fluctuations?
It assumes steady growth to represent average performance.
Is this calculator free?
Yes, completely free and no data is stored.