persentage icon with blue backgroundWebinar in 2 Days! Join Abhijit Paul to recognize Breakout Failures in trading. REGISTER NOW persentage icon with blue background

{{CalculatorName}}

This calculator helps you to calculate the compounded annual growth rate (CAGR) of your investment over a given period.

CAGR Calculator - Compute Compound Annual Growth Rate

Initial investment

Minimum value should be ₹500 (without decimal).

Final value of Investment

Minimum value should be ₹500.

Investment period

Yr

Minimum value should be 1.

Your investment will grow from {{initialAmount | customcurrency}} to {{presentValueAmount | customcurrency}} in {{totalYear < 1 ? 0: totalYear}} {{totalYear > 1? 'years':'year'}} at a compounded annual growth rate of {{calculateCagr()}}%.

CAGR
{{calculateCagr()}}%

Initial Investment

Future Value

CAGR Calculator- Compound Annual Growth Rate Calculator Online with CAGR Formula

If you're interested in investing in financial markets, you may be wondering how much return you'll get on your investment. This is where the Compound Annual Growth Rate (CAGR) comes in handy. But, you might be thinking that it involves complicated mathematical formulas. Fortunately, there are various CAGR calculators available online that can help you determine your return on investment.

So, before calculating your investment returns, it's essential to understand the basics of this concept. Let's dive in.

What is Compound Interest?

Compound interest is a type of interest that is calculated on the principal amount invested as well as the interest earned on it over a period of time. Unlike simple interest which only considers the original investment, compound interest takes into account the accumulated interest over time. The longer you hold an investment or a financial product, the greater the potential benefit from compound interest.

What is CAGR and how can a CAGR Calculator help you?

CAGR measures how much you have earned on your investment annually during a specific period. This allows you to determine whether your investment returns have increased or decreased during that period. For business owners, CAGR helps to identify whether the business is growing, and profits are being reinvested. With the help of a CAGR calculator you can determine your true investment returns annually.

Using a CAGR calculator can help you in several ways, including:

  • Determining whether your business is growing over time and whether the profits are being invested effectively.
  • Evaluating investment options based on their respective CAGR indices. For example, if Stock A is underperforming compared to Stock B, you may consider investing in Stock B instead.
  • Understanding the relative growth of your organization in comparison to the market leaders in your business segment.

What is the difference between Simple Growth Rate and Compound Annual Growth Rate?

The Simple Growth Rate describes the performance of an investment throughout its entire time horizon. On the other hand, the Compound Annual Growth Rate indicates the average annual rate of return an investment needs to achieve to grow from its starting balance to its final balance.

This calculation can be applied to any investment duration and is not restricted to a specific time frame. Additionally, the Compound Annual Growth Rate enables investors to compare the performance of investments across various time periods.

What is the formula for Simple Growth Rate?

The formula for Simple Growth Rate is: Simple Growth Rate = (Future Value - Present Value) / Present Value * 100

An example of Simple Growth Rate-

If you invested Rs. 15,000 in 2019 and received Rs. 20,000 in 2022, the Simple Growth Rate would be (20,000 - 15,000) / 15,000 * 100 = 33.33%.

How do you calculate using the CAGR Calculator?

The CAGR is calculated using this formula-

CAGR = (Future Value / Present Value) ^1/t - 1, where t represents the annual time period.

An example of CAGR calculation-

Considering the same investment scenario as before, then CAGR would be {(20,000 / 15,000) ^1/3} - 1 = 10.06%.

Although this calculation can be quite complex, you can easily use our online CAGR calculator above to make the process simpler.

How to use our Online CAGR Calculator?

With our CAGR calculator online, calculating CAGR is easy and free. You only need to follow these three steps:

Enter the value of your initial investment.

Enter the future value of your investment.

Enter the investment period and click on "Calculate now."

The result will appear like this-

Online CAGR Calculator

Although there are several CAGR calculators online, it's important to use the one which is user-friendly for accurate calculations. With Elearnmarkets's online CAGR calculator, you can easily and accurately calculate your business's CAGR using an organized and efficient approach.

Reverse CAGR Calculator

In addition to regular CAGR calculations, you can also use a reverse CAGR calculator to determine the initial investment required to reach a specific target value. Simply enter the target value, the investment period, and the desired CAGR, and the calculator will determine the required initial investment.

CAGR Return Calculator

Another type of CAGR calculator is a CAGR Return calculator. It helps you calculate the CAGR return on your Systematic Investment Plan (SIP) investments over a specific period.

In conclusion, an online CAGR calculator is an essential tool for investors. With the help of this tool, you can easily calculate your investment returns and make informed decisions.

CAGR Calculator- FAQs

What percentage of CAGR is good?

When it comes to defining a good CAGR (Compound Annual Growth Rate), there is no clear standard. However, typically, a CAGR of 15% to 25% over five years can be considered a good rate of return when investing in stocks or mutual funds. On the other hand, if the CAGR is lower than 12%, other investment options such as real estate, debentures, or other securities may be more attractive.

What is CAGR returns in Mutual Funds?

CAGR (Compound Annual Growth Rate) is a measure used to determine the average annual growth rate of an investment over a specific period of time. In the case of mutual funds, CAGR is used to evaluate the fund's average growth rate over periods of 1 year, 3 years, 5 years, or since inception.

To calculate CAGR for mutual funds, the starting and ending values of the fund are considered, and the growth rate required to achieve the ending value from the starting value over the given period is calculated, taking into account the effect of compounding.

For instance, assume a mutual fund has a starting value of Rs. 100 and an ending value of Rs. 150 over a period of time. The total return would be 50%, but to determine the average annual growth rate, the CAGR formula is applied.

To figure that out, we would use the CAGR formula:

CAGR = (Ending Value / Beginning Value) ^1/t - 1

For a 5-year period, the CAGR would be:

CAGR = (150 / 100)^(1/5) - 1 CAGR = 0.1072 or 10.72%

This indicates that the mutual fund's average annual growth rate was 10.72% over the 5-year period.

It's important to note that past performance is not a guarantee of future results, and mutual fund investors should always consider other factors such as the fund manager's track record, investment objective, and risk profile before making an investment decision. Here is a list of fund managers with their detailed information and the schemes managed by them.

What does a CAGR tell you?

CAGR (Compound Annual Growth Rate) is an important tool used by companies to evaluate the value of their products and services based on their performance and CAGR percentage. Calculating CAGRs is one of the most precise ways to determine the return on investment, and it can also provide insight into a company's average performance over a specific period of time. This information can be highly valuable in helping you decide whether to invest in a particular stock and whether the company has potential for future growth.

You can calculate a company’s CAGR by using our online CAGR Calculator.

What does 10% CAGR mean?

CAGR is a metric that provides insight into the average rate at which an investment has grown over a specific period. A CAGR of 10% means that the 10% interest you earn annually is added to your initial investment. Then, on the total amount, you again receive a 10% return.

To illustrate, suppose you invest Rs 1 lakh. With a CAGR of 10%, the investment will grow to Rs 1.1 lakh in the first year. In the second year, it will be Rs. 1.21 lakh, and so forth.

What does 3-year CAGR mean?

A 3-year CAGR is a way to measure the average rate of growth of an investment over a 3-year period. It takes into account any ups and downs in the investment's value during that time.

To calculate the 3-year CAGR, you need to know the investment's starting value and ending value over the three-year period. You then use a formula to calculate the average annual growth rate of the investment over that time.

For example, if an investment started with a value of ?10,000 and ended with a value of ?15,000 after three years, the 3-year CAGR would be 12.25%. This means that on average, the investment grew at a rate of 12.25% per year over the three-year period.

You can check the returns generated in last 3 years by Equity Large Cap funds to view the top performing funds.

Is CAGR better higher or lower?

Any CAGR below 8% is not considered good, and a company that offers a 7% compound annual growth rate may be less attractive to investors. In other words, if you are wondering whether a 7% CAGR is good, it suggests that your company may be taking on additional risk with its new offerings.

Investors seeking stable returns by investing in strong and large companies in the financial market should aim for a CAGR percentage of 8% to 12%. On the other hand, for those willing to take moderate to high risks with their investments, a CAGR percentage of 15% to 25% may be considered a good target.

Difference between Annual Return and CAGR

An annualised return considered to be a standardised return computed as a percentage per annum. Annualised Return = (End Value – Beginning Value) / (Beginning Value) * 100 * (1/holding period of the investment)

Annualised return is concluded as a return for the entire year. CAGR shows the average yearly growth of your investments.

In short, while annual return focuses on year-by-year changes in value, CAGR provides an annualized growth rate over a specified period, taking into account the effects of compounding.

Example of a CAGR

To calculate the Compound Annual Growth Rate (CAGR), Use the formula: CAGR = (Ending Value / Starting Value)^(1 / Number of Years) – 1

Here’s an example for this calculation:

Let’s say you invested ₹5,000 in any mutual fund and after 5 years, it grew to Rs 10,000.

Starting Value: ₹5,000

Ending Value: ₹10,000

Number of Years: 5

CAGR = (₹10,000 /₹5,000)^(1 / 5) – 1

CAGR = 14.87%

That means your investment will grow from ₹5,000 to ₹10,000 in 5 years at a compounded annual growth rate of 14.87%.

Can we calculate CAGR for SIP?

The CAGR for SIP investments is calculated by the total amount of money invested at the end and the time duration of it. In the case of SIPs, it does not take periodic investments into account as it only considers the first and final values for its calculation.

Investors prefer SIPs for their disciplined approach to investing irrespective of its volatile nature. CAGR steps in as a tool to provide a realistic growth estimate.

Let’s understand the CAGR with an example: If we invest ₹500 for 12 months, you may receive ₹6500 at the time of maturity.

Can CAGR be negative?

Yes. The CAGR (Compound Annual Growth Rate) can be negative. A negative CAGR basically indicates that an investment decreases over a given period of time rather than increases.

Can you use CAGR for profit?

CAGR is one of the most popular variables used to determine the profitability of an investment plan, as it demonstrates the average performance of the same over a period of time.

What does 5% CAGR mean?

CAGR is a metric that provides insight into the average rate at which an investment has grown over a specific period. A CAGR of 5% means that the 5% interest you earn annually is added to your initial investment. Then, on the total amount, you again receive a 10% return.

To illustrate, suppose you invest ₹1 lakh. With a CAGR of 5%, the investment will grow to ₹1.05 lakh in the first year. In the second year, it will be ₹1.10 lakh, and so forth.