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How to calculate CAGR, with examples

Updated 2026-11-13

Quick answer

CAGR = (End value ÷ Start value)^(1 ÷ years) − 1. Money that grows from ₹10,000 to ₹20,000 in 5 years has a CAGR of (2)^(1/5) − 1 = 14.87% a year. It is the steady yearly rate that would give the same result.

Steps

  1. Take the starting value and the ending value. Here: ₹10,000 and ₹20,000.
  2. Divide the end by the start: 20,000 ÷ 10,000 = 2.
  3. Raise the result to the power of 1 divided by the years: 2^(1/5) = 1.1487.
  4. Subtract 1 and multiply by 100 to get the percentage: 14.87%.
  5. Or enter the three numbers in the CAGR calculator and read the rate.

Why CAGR is better than a simple average

Total growth hides how long it took. ₹10,000 doubling in 5 years is a CAGR of 14.87%, while the same doubling in 10 years is only 7.18%. Both are a 100% total gain, yet the first is twice as good a rate.

CAGR turns any gain over any period into one yearly rate, so you can compare a stock, a fund and a deposit on equal terms.

Other examples, including a loss

₹50,000 growing to ₹1,20,000 over 7 years is a CAGR of 13.32%, a total growth of 140%. A fall works the same way: ₹1,00,000 shrinking to ₹80,000 in 3 years is a CAGR of −7.17% a year, a total change of −20%.

What CAGR hides

CAGR smooths out the ups and downs. An investment that fell 30% one year and rose the next shows the same CAGR as one that grew steadily, but it was a harder ride. CAGR also ignores money added or taken out along the way, so for a SIP use the SIP calculator or an XIRR-style measure instead.

Try it yourself

Common questions

What is CAGR?

The compound annual growth rate: the steady yearly rate that would take a starting value to an ending value over a number of years.

Can CAGR be negative?

Yes. If the ending value is lower than the start, the CAGR is negative.

Is CAGR the same as the average return?

No. An average of yearly returns ignores compounding, while CAGR accounts for it.

Does CAGR work for a SIP?

Not directly, because money goes in at different times. Use a measure that accounts for the dates of each investment.

Also read: How to calculate lumpsum investment returns, How inflation reduces your money, with numbers