CAGR calculator

The steady rate behind any growth

CAGR turns a starting value, an ending value and the years between them into one yearly rate — the steady, compounded pace that would have produced the same result. It is how fund returns and backtests are usually quoted, and the only fair way to compare growth over different periods.

Your numbers

Change anything; the result updates as you type.

Result

A CAGR says nothing about the ride.

Two investments with the same CAGR can have lived through very different falls on the way. MindForge publishes the backtest behind each of its three strategies, and the two paid ones trade in their own broker-verified Zerodha accounts, with the drawdowns shown beside the backtested CAGR.

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How CAGR is calculated

Divide the ending value by the starting value, take the root for the number of years, and subtract one. The result is the constant yearly rate that turns one into the other.

CAGR = (ending value ÷ starting value)^{1 ÷ years} − 1

Absolute return is not a yearly return

Doubling your money is a 100% absolute return whether it takes three years or twelve. As a CAGR, that is 25.99% a year over three years and 5.95% a year over twelve — which is why a return quoted without its period says very little.

What CAGR hides

The path. CAGR joins two points with a smooth curve. A portfolio that fell by half and recovered can show the same CAGR as one that rose steadily.
Money added or taken out. CAGR is for a single sum. For monthly investing, the rate that accounts for when each rupee went in is XIRR.
Fees and tax, unless the two values you enter are already after them.

Questions

What is a good CAGR?

It depends on the risk taken to earn it. Compare a CAGR with the alternative you could have held for the same period, such as an index, a fixed deposit or inflation, rather than with a fixed number.

Can CAGR be negative?

Yes. If the ending value is below the starting value, the CAGR is the steady yearly rate of decline that connects the two.

Is CAGR the same as XIRR?

Only for a single investment with no money added or taken out. When there are several cash flows, as in a SIP, XIRR is the rate that accounts for when each one went in, and CAGR on the totals would misstate it.

Can I use part-years?

Yes. The period moves in half-year steps, so 2.5 years is two years and six months.

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