CAGR Calculator
Calculate Compound Annual Growth Rate of investments
📊 Popular CAGR Examples
Nifty 50 Index (10 Years)
SBI Large Cap Fund
Real Estate Mumbai
Gold Investment
PPF Investment
Small Cap Fund
Understanding CAGR: Complete Guide
What is CAGR?
CAGR (Compound Annual Growth Rate) is the rate at which an investment grows annually over a specified period, assuming profits are reinvested. It provides a smoothed annual growth rate that accounts for the compounding effect. Unlike simple average returns, CAGR considers the volatility and gives you the actual annual growth rate if the investment grew at a steady rate.
CAGR Formula: [(Final Value / Initial Value)^(1/Years)] - 1
Example: ₹1L grows to ₹2L in 5 years
CAGR = [(2,00,000 / 1,00,000)^(1/5)] - 1 = 14.87%
CAGR vs Average Return
When to Use CAGR
- Comparing mutual fund performance
- Evaluating stock returns over time
- Analyzing business revenue growth
- Measuring portfolio performance
- Planning investment goals
- Comparing different asset classes
CAGR Benchmarks by Asset Class
| Asset Class | Historical CAGR (10 years) | Risk Level | Best For |
|---|---|---|---|
| Large Cap Equity | 12-14% | Medium | Stable growth, beginners |
| Mid Cap Equity | 15-18% | High | Higher growth potential |
| Small Cap Equity | 18-22% | Very High | Aggressive investors |
| Debt Funds | 7-9% | Low | Capital protection |
| Gold | 8-10% | Medium | Inflation hedge |
| Real Estate | 6-8% | Medium | Long-term wealth |
| Fixed Deposits | 6-7% | Very Low | Safety, emergency fund |
💡 CAGR-Based Investment Strategies
1. Target-Based Investing
Set a target CAGR based on your goals. For retirement: 12-15%, for children's education: 10-12%, for house down payment: 8-10%.
Match CAGR expectations with time horizon
2. Asset Allocation by CAGR
Allocate based on required CAGR. Need 15% CAGR? 70% equity + 30% debt. Need 10% CAGR? 50% equity + 50% debt.
Higher CAGR needs = Higher equity allocation
3. Regular Monitoring
Review portfolio CAGR annually. If consistently underperforming, consider rebalancing or changing funds/stocks.
Track 3-year rolling CAGR for accuracy
4. Realistic Expectations
Don't chase unrealistic CAGR. 25%+ CAGR is unsustainable long-term. Stick to 12-18% for equity, 7-9% for debt.
Sustainable CAGR leads to long-term wealth
5. Time Horizon Matters
Longer time horizon allows for higher CAGR targets. 20+ years: aim for 15%, 5-10 years: aim for 12%, <5 years: aim for 8-10%.
Time reduces risk, allows higher CAGR
6. Diversification Impact
Diversified portfolio may have lower CAGR but more consistent returns. Single stock may give 30% CAGR but with high risk.
Balance CAGR with risk management
📈 Real-World CAGR Success Stories
Warren Buffett's Berkshire Hathaway
Period: 1965-2023 (58 years)
Initial Value: $19 per share
Current Value: $500,000+ per share
CAGR: 19.8% annually
Key Lesson: Consistent long-term investing with patience and discipline can create extraordinary wealth through compounding.
$1,000 invested in 1965 = $26+ million today!
Indian Stock Market Success
TCS (2004-2024)
₹100 → ₹3,500
CAGR: 19.2%
HDFC Bank (2000-2024)
₹50 → ₹1,600
CAGR: 15.4%
Asian Paints (2010-2024)
₹200 → ₹3,000
CAGR: 21.8%
Mutual Fund CAGR Champions (10-Year)
| Fund Name | Category | 10-Year CAGR | ₹10K SIP Value |
|---|---|---|---|
| Quant Small Cap Fund | Small Cap | 28.5% | ₹55.2 lakh |
| Parag Parikh Flexi Cap | Flexi Cap | 24.2% | ₹42.8 lakh |
| SBI Small Cap Fund | Small Cap | 22.9% | ₹38.5 lakh |
*Past performance doesn't guarantee future returns. These are exceptional performers.
Related Calculators
You may also use our SIP Calculator and Lumpsum Calculator to plan your investments. For retirement planning, try our Retirement Calculator.
Compare investment returns with our Inflation Calculatorto see real returns. For mutual fund analysis, use our Mutual Fund Calculator.
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Frequently Asked Questions
What is CAGR (Compound Annual Growth Rate)?
CAGR is the rate at which an investment grows annually over a specified period, assuming profits are reinvested.
How is CAGR different from average return?
CAGR considers compounding effect and gives a smoothed annual growth rate, while average return is a simple arithmetic mean.
When should I use CAGR?
Use CAGR to compare investment performance over time, evaluate mutual funds, stocks, or any investment that compounds.
What is a good CAGR?
For equity investments, 12-15% CAGR is considered good. For debt, 7-9% is reasonable. It varies by asset class and market conditions.