CAGR Calculator

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Final investment value

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Duration of Investment

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50 yrs

CAGR Calculator

The Compound Annual Growth Rate or CAGR calculator from Investkraft is a user-friendly application that can instantly and accurately calculate both the compound annual growth rate and absolute return based on the user inputs. Business owners can find out the CAGR percentage of their businesses by simply inputting 3 values - initial investment value, final investment value and the duration of the investment.

How Does CAGR Work?

CAGR is a way to measure how fast an investment is growing each year. It looks at the average growth rate over a certain period and assumes that the growth is being added to the investment each year. This helps to give a better idea of how much an investment is likely to grow over time.

Now, let us understand how the CAGR calculator formula works with the help of a detailed example. We will also discuss the formula in detail.

CAGR Calculator Formula

CAGR = (FV / PV) 1 / n – 1


FV = Future Value

PV = Present Value

N = Time (in years)

Let's say you're considering investing in a mutual fund. You've been presented with some historical data and projections for its growth. Here's a realistic example:

Let's assume:

  • PV (Present Value): ₹10,000
  • FV (Future Value): ₹20,000
  • n (Time in years): 5 years

Using the provided formula, we can calculate the Compound Annual Growth Rate (CAGR):

CAGR = (20000 / 10000)^(1/5) - 1

CAGR ≈ (2)^(0.2) - 1

CAGR ≈ 1.1487 - 1

CAGR ≈ 0.1487 or 14.87%

So, the CAGR for this investment over 5 years would be approximately 14.87%. This means that the investment has grown at an average annual rate of 14.87% over the given period. This can be a useful metric for comparing investments or assessing their potential growth.

How to Use the CAGR Calculator to Calculate My Investment Value?

Investkraft’s CAGR calculator is the simplest of tools you will find in the market through which you can calculate the CAGR value of your investment in a few simple steps:

  1. Enter the initial investment value in the respective box
  2. Enter the final investment value
  3. Select an investment duration
  4. Now, click on the “Invest Now” button

What are the Benefits of CAGR?

There are multiple benefits and use cases for calculating the CAGR of your investments. The same have been listed below:

  • To Compare Performance: CAGR is a way to compare how well different investments have done over a certain time. It makes it easier to compare them by looking at how much they've grown on average each year, instead of just looking at the raw numbers. This helps investors to make a fair evaluation of their investments and choose the best option for them.
  • To Plan for Long Term: Long-term planning is important when it comes to investing your money. CAGR (Compound Annual Growth Rate) is a tool that can help you estimate the potential growth of your investments over some time. This can help you make informed decisions about where to invest your money and how much to expect in return. By using CAGR, you can project the future value of your investments and plan for your financial goals accordingly.
  • Assess Risk: When you invest your money, you always take some risk. It's important to know how much risk you're taking. There's a way to measure this risk, and it's called CAGR. This measurement looks at how much your investment grows over time. If the CAGR is always going up, it means your investment is getting more and more valuable. This is good news if you're someone who doesn't like to take a lot of risks with your money. It means your investment is likely to be more stable and reliable.
  • To Find Effectiveness of Investment Strategies: Through CAGR, investors can gauge how their investments have historically performed. Comparisons can be made between the CAGR and industry standards or benchmark indices to analyze whether the investment strategies worked and if not, identify the areas for improvement.

FAQs on Compound Annual Growth Rate

A: There is no particular answer to the question “What is a good CAGR”, as CAGR rates can vary from company to company depending on their size. Usually, any CAGR below 8% for any company is considered poor.

A: 5-12% CAGR for large-cap companies and 15-30% CAGR for small-cap companies is considered good.

A: There are several free SIP CAGR tools available on the internet that you can use to calculate CAGR for your SIPs.

A: Yes, you can calculate the CAGR value in an Excel sheet.

A: Yes, negative CAGR is defined as negative overall growth. A steady decline in profits or portfolio value can lead to a negative CAGR.

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