Free CAGR Calculator 2026 to calculate Compound Annual Growth Rate for your investments. Analyze investment performance with year-by-year growth charts and instant results.
Calculate Compound Annual Growth Rate for your investments and track growth over time
Starting amount
Ending value
Duration in years
Select currency
Historically, stock markets have delivered 10-12% CAGR over long periods. The S&P 500 has averaged around 10% annually since 1926, though individual years vary widely.
Key Point: Short-term volatility is smoothed out by CAGR, making it ideal for evaluating long-term equity performance.
Real estate typically generates 8-10% CAGR when combining property appreciation and rental income. Commercial properties may achieve higher returns but with greater risk.
Key Point: CAGR helps compare property investments across different locations and time periods objectively.
CAGR: Assumes a single lump-sum investment held for the entire period. Best for buy-and-hold strategies.
IRR (Internal Rate of Return): Accounts for multiple cash flows (deposits/withdrawals) over time. Best for SIP, recurring investments, or projects with interim cash flows.
When to use CAGR: One-time investments like mutual fund lump sums, stocks, or property. When to use IRR: SIP mutual funds, recurring deposits, or business projects with staged funding.
The Compound Annual Growth Rate (CAGR) formula calculates the mean annual growth rate of an investment over a specified time period longer than one year. It represents one of the most accurate ways to calculate and determine returns for individual assets, investment portfolios, and anything that can rise or fall in value over time.
CAGR Formula:
Where Final Value is the ending balance, Initial Value is the starting balance, and Years is the number of years the investment was held.
The simple growth rate (also called absolute return or total return) measures the overall percentage change from start to finish without considering the time period. While easier to calculate, it doesn't account for the compounding effect over multiple years.
Simple Growth Rate Formula:
CAGR is most useful when you want to understand the smoothed rate of growth over time, ignoring volatility. It's ideal for comparing investments with different time horizons or evaluating historical performance.
Follow these simple steps to manually calculate CAGR for any investment:
Divide Final Value by Initial Value: Calculate the growth ratio (Final Value ÷ Initial Value)
Find the Exponent: Calculate 1 divided by the number of years (1 ÷ Years)
Raise to the Power: Raise the growth ratio to the power of the exponent from step 2
Subtract 1 and Multiply by 100: This gives you the CAGR as a percentage
Understanding the difference between simple growth rate and CAGR helps you choose the right metric for your analysis:
| Metric | Simple Growth Rate | CAGR |
|---|---|---|
| Considers Time | No | Yes |
| Accounts for Compounding | No | Yes |
| Best For | Short-term or single-period returns | Multi-year investment analysis |
| Shows Volatility | Yes (shows total change) | No (smooths out fluctuations) |
Let's say you invested ₹1,00,000 in a mutual fund in January 2019, and by January 2024 (5 years later), it grew to ₹1,61,051. What was your CAGR?
Step 1: Final Value ÷ Initial Value = ₹1,61,051 ÷ ₹1,00,000 = 1.61051
Step 2: 1 ÷ Years = 1 ÷ 5 = 0.2
Step 3: 1.61051 ^ 0.2 = 1.10
Step 4: (1.10 - 1) × 100 = 10%
Result: Your investment grew at a CAGR of 10% per year.
If you have monthly or quarterly data instead of annual figures, you can still calculate CAGR by converting the time period to years:
Divide the number of months by 12 to get years. For example, 30 months = 2.5 years. Then use the standard CAGR formula with 2.5 as the time period.
Divide the number of quarters by 4 to get years. For example, 12 quarters = 3 years. Apply the CAGR formula with 3 as the time period.
Sometimes you know the CAGR and initial value, but you want to calculate what the final value will be. The reverse CAGR formula lets you project future value based on a consistent growth rate:
Reverse CAGR Formula:
Example: If you invest ₹50,000 at 12% CAGR for 10 years, the final value will be ₹50,000 × (1.12)^10 = ₹1,55,292.
You can easily calculate CAGR in Microsoft Excel using the formula below. This is useful for analyzing multiple investments or creating financial models:
Excel Formula:
=((Final_Value/Initial_Value)^(1/Years))-1Or use: =POWER(B2/A2,1/C2)-1 where A2 is initial value, B2 is final value, and C2 is years.
Pro Tip: Format the result cell as percentage with 2 decimal places for better readability.
This calculator uses the standard CAGR formula: ((Final Value / Initial Value)^(1 / Years)) - 1. When inflation adjustment is enabled, Real CAGR is calculated as: ((1 + Nominal CAGR) / (1 + Inflation Rate)) - 1, providing purchasing-power-adjusted returns.
Calculation logic and financial methodology reviewed by the VIP Calculator team for consistency with industry-standard investment analysis practices.
CAGR assumes constant growth and does not reflect actual year-to-year volatility. It does not account for taxes, fees, or transaction costs unless explicitly entered. Past performance does not guarantee future results.
Last Reviewed: December 2025
Privacy & Data Security: All calculations are performed locally in your browser. No financial data is stored, shared, or transmitted to any server.
The Compound Annual Growth Rate (CAGR) provides a smoothed annual rate of growth over a specified period of time.
CAGR = ((Final Value / Initial Value)^(1 / Number of Years)) - 1
Additional Calculations:
Total Growth % = ((Final Value - Initial Value) / Initial Value) × 100
Absolute Return = Final Value - Initial Value
Year N Value = Initial Value × (1 + CAGR)^N
Example:
Initial Value: $10,000
Final Value: $16,105
Years: 5
CAGR = (($16,105 / $10,000)^(1 / 5)) - 1 = 10%
CAGR is the mean annual growth rate of an investment over a specified period longer than one year. It represents the constant rate of return needed for an investment to grow from its beginning value to its ending value, assuming profits were reinvested at the end of each year. Unlike simple returns, CAGR smooths out volatility to show the true growth rate.
CAGR is calculated using the formula: CAGR = ((Final Value / Initial Value)^(1 / Number of Years)) - 1. For example, if you invested $10,000 and it grew to $15,000 in 3 years, the CAGR would be ((15,000 / 10,000)^(1 / 3)) - 1 = 14.47%. This means your investment grew at an average annual rate of 14.47%.
CAGR is more accurate than simple average return because it accounts for the effect of compounding and smooths out volatility. Simple average can be misleading with fluctuating returns. For example, if an investment drops 50% one year and gains 50% the next, the average return is 0%, but the actual return is negative. CAGR provides a more realistic picture of growth.
Yes, CAGR can be negative if the final value is less than the initial value, indicating a loss over the investment period. A negative CAGR shows the average annual rate of decline. For example, if $10,000 declines to $8,000 over 2 years, the CAGR would be approximately -10.56% per year.
A 'good' CAGR varies by asset class and market conditions. Stock market historical CAGR averages 10-12% annually. Real estate averages 8-10%. Bonds average 5-6%. Consider inflation (typically 2-3%) when evaluating CAGR. Any CAGR above inflation represents real growth. Higher CAGR usually indicates higher risk and volatility.
Calculate CAGR for each investment over the same time period, then compare. The investment with the higher CAGR performed better. However, also consider risk, volatility, and your investment goals. A higher CAGR doesn't always mean a better investment if it comes with significantly higher risk or doesn't align with your financial objectives.
Yes, you can use decimals in the years field. For example, 6 months = 0.5 years, 3 months = 0.25 years, 18 months = 1.5 years. However, CAGR is most meaningful for periods longer than one year, as it's designed to smooth out short-term volatility and show long-term growth trends.
Your calculation history is automatically saved in your browser's local storage for up to 3 days. The calculator stores your last 5 calculations and automatically removes entries older than 3 days to keep your history relevant. You can manually clear your history anytime using the 'Clear History' button. Your data stays private and never leaves your device.