Work out the yearly growth rate of an investment between two values.
CAGR (per year)
Absolute return
Total gain
CAGR, or compound annual growth rate, tells you how fast an investment grew each year on average, assuming growth compounded smoothly. It is the fairest way to compare investments held for different lengths of time.
Why CAGR beats “total return”
Suppose an investment of ₹1 lakh is worth ₹1.5 lakh after 3 years. The absolute return is 50%, which sounds large, but the CAGR is about 14.47% a year. Another investment that doubled in 5 years (100% absolute return) has a CAGR of about 14.87%, so the two performed almost the same each year.
Uses
Comparing a mutual fund’s performance with its benchmark index over the same period.
Checking whether a property, stock or business grew faster than inflation or a fixed deposit.
Reading company results: revenue and profit growth are often quoted as a 3-year or 5-year CAGR.
How this is calculated
CAGR = (Final value ÷ Starting value)1 ÷ years − 1
CAGR is the steady yearly growth rate that would turn the starting value into the final value over the period. Unlike absolute return, it accounts for how long the money was invested.
Assumptions
CAGR smooths out ups and downs; it does not show how volatile the investment was along the way, and ignores money added or withdrawn in between (use XIRR for that).
Rules and formula last verified: 12 October 2026
Frequently asked questions
What is the rule of 72?
Divide 72 by the annual growth rate to estimate how many years money takes to double. At 12% a year, money doubles in about 6 years; at 8%, about 9 years.
When should I use XIRR instead of CAGR?
CAGR assumes one investment at the start and one value at the end. If you invested or withdrew money at different times, as with a SIP, XIRR gives the correct annual return.
Results are estimates for information only, based on the inputs and assumptions shown. They are not financial, tax or legal advice. Banks, fund houses and the tax department may calculate actual amounts differently.
