Is CAGR the same as average annual return?

No. The arithmetic average of yearly returns is usually higher than CAGR when returns vary. CAGR is the compounded, geometric rate.

Can CAGR be negative?

Yes. If the ending value is below the starting value, CAGR is negative — halving over 2 years is about −29.29% a year.

It depends on the asset and risk. Compare it with an alternative over the same period, such as an index fund or a fixed deposit rate.

What is the difference between CAGR and XIRR?

CAGR uses one start and one end value. XIRR handles many cash flows on different dates, which is why it is used for SIPs.

No. It smooths the path completely. Two investments with the same CAGR can have very different ups and downs.

Financial · Free tool

CAGR Calculator

Compound annual growth rate between two values — investments, revenue or anything that grows.

Compound annual growth rate (CAGR) answers a simple question: what steady yearly rate would turn the starting value into the ending value over this many years? It is the standard way to compare the growth of investments, company revenue, user numbers or prices over periods of different lengths.

A total return on its own can mislead. "150% in seven years" and "60% in three years" are hard to compare until both are annualised — about 13.99% versus 16.96% a year. CAGR does that annualising with compounding built in, so it is directly comparable with an FD rate or an index return.

CAGR deliberately hides volatility: a fund that rose 40% and then fell 20% has the same CAGR as one that rose a steady 5.8% a year. Treat it as a summary of where you ended up, not how bumpy the road was.

By DailyCalc Editorial Team · Updated 2026-10-03 · 6-min read · 3 sources cited

● CAGR calculator

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CAGR formula

CAGR = (End ÷ Start)^(1 ÷ years) − 1

End ÷ Start is the growth multiple. Raising it to the power 1/years finds the yearly factor that, compounded over that many years, produces the same multiple. Subtract 1 and multiply by 100 for a percentage. The doubling time shown is ln 2 ÷ ln(1 + CAGR); the rule of 72 (72 ÷ rate) is a quick approximation of it.

Start: Value at the beginning of the period (must be above zero).
End: Value at the end of the period.
years: Length of the period; fractions allowed (18 months = 1.5).

Worked example: ₹1,00,000 grows to ₹2,50,000 in 7 years

An investor checks how a mutual fund holding actually performed:

Growth multiple = 2,50,000 ÷ 1,00,000 = 2.5.
Yearly factor = 2.5^(1/7) ≈ 1.13985.
CAGR = 1.13985 − 1 = 0.13985 → 13.985% a year.
Total return = (2.5 − 1) × 100 = 150%.
Doubling time = ln 2 ÷ ln 1.13985 ≈ 5.3 years (rule of 72: 72 ÷ 14 ≈ 5.1).

Result: CAGR ≈ 13.99% a year — a 2.5× multiple, 150% total return, money doubling about every 5.3 years.

How to use this CAGR calculator

Three numbers from any two points in time.

Step 1: Enter the starting value

The amount invested or the metric at the start. It must be greater than zero.

Step 2: Enter the ending value

Current value or the value at the end of the period. Use a lower number to measure a loss.

Step 3: Enter the number of years

Exact years between the two values. Use decimals for part years: 30 months = 2.5.

Where CAGR is used

Anywhere growth needs comparing across different time spans:

Investment performance

Compare a lump-sum holding with an index or FD rate on an annual basis.

Business growth

Revenue from ₹50 lakh to ₹80 lakh over 3 years is a 16.96% CAGR — the figure investors expect in a pitch deck.

Comparing funds

Fund factsheets quote 3-, 5- and 10-year CAGRs; this lets you check them from NAVs yourself.

Measuring losses

A holding that halved over 2 years has a CAGR of about −29.29% a year — worse than the −25% people often guess.

Setting targets

Reverse the logic: to double in 6 years you need a CAGR of about 12.25%.

Pro tips

Use CAGR carefully:

Use CAGR for a single lump sum. For SIPs or multiple deposits, use XIRR, which accounts for the date of each cash flow.
Compare CAGRs only over the same period — start and end dates change the answer a lot.
Look at worst-year returns alongside CAGR to understand the risk you took to earn it.
Subtract inflation for the real growth rate in today's money.
Include dividends or reinvested income in the ending value for a true total-return CAGR.

Common mistakes

Misuses that inflate or distort growth:

Dividing total return by years

150% ÷ 7 = 21.4% a year is wrong; it ignores compounding. The correct CAGR is 13.99%.

Using CAGR for SIPs

Money added over time was not all invested for the full period, so a simple start/end CAGR overstates or understates performance.

Cherry-picking dates

Starting at a market low makes almost any investment look good. Check several periods.

Ignoring costs and tax

Use values after fees and taxes when you want the return you actually kept.

Sources & references

The formula, thresholds and guidance on this page were checked against these primary sources. Written and reviewed by DailyCalc Editorial Team; last updated 2026-10-03. Spotted an error? Tell us.

Disclaimer: Illustrative only — not investment advice. Past growth rates do not predict future results.

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