Eternexa

CAGR Calculator

Turn any before-and-after into an honest yearly growth rate — and see through the “300% returns!” headlines.

Before and after

₹1.00 Lakh
₹2.00 Lakh
5 years
Compound annual growth rate
14.87%100.0% in total, not per year

₹1.00 Lakh grew to ₹2.00 Lakh over 5 years

2.00×what it turned into
Growth multiple
2.00×
Absolute return
100.0%
Over
5 years
  • What you started with
  • What it gained
What it grows toWhat you investYr 0Yr 1Yr 3Yr 4Yr 5
Smooth path at this CAGRInitial value

The headline number vs the honest one

A big total return spread over many years is a small annual one. That gap is the whole point of CAGR.

Initial value
₹1,00,000
+ Gained over the period
₹1,00,000100.0% in total
Final value
₹2,00,00014.87% a year
CAGR assumes one amount invested once. For monthly drips — SIPs, RDs — the same before/after maths overstates or understates the true return; those need XIRR (your fund statement shows it), not CAGR.

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One number to compare anything

CAGR — compound annual growth rate — answers the only question that makes investments comparable: what steady yearly rate would have produced this journey? A flat you sold, a fund you held, gold in the locker, your company’s revenue — different amounts, different holding periods, one honest yardstick.

The formula

CAGR = (Final value ÷ Initial value)^(1 ÷ years) − 1

Worked example: ₹1 lakh becoming ₹2 lakh in 5 years is a 100% absolute return — but 14.87% a year compounded. And ₹1 lakh becoming ₹4 lakh in 10 years? Also 14.87% — double the money in double the time is the same speed, which is exactly the insight absolute returns hide. It is the compound interest formula run backwards: put 14.87% back into a compounding calculation and ₹1 lakh dutifully becomes ₹2 lakh in 5 years.

The “300% returns!” decoder

Marketing loves absolute returns because time is invisible in them. “300% returns” over 10 years is 14.9% a year — good, not miraculous. Over 20 years it is 7.2% — an FD in a costume. Real-estate anecdotes are the classic case: the plot that “went 10×” since 2003 compounds out to about 11% a year — before maintenance, taxes and the years it could not be sold. Whenever a return is quoted without a time period, this page is the antidote: divide by time properly, through the power law, not with a ruler.

Where CAGR stops working

CAGR describes one lump invested once. The moment money drips in — a SIP, an RD, irregular top-ups — each instalment has its own holding period, and the before/after formula misprices the journey; the right tool there is XIRR, which your fund statement already computes. Two more honest caveats: CAGR is the smoothed path (a fund that did +40%, −25%, +20% shows a gentle curve it never actually lived), and it says nothing about money’s buying power — subtract inflation to see the real speed. A 12% CAGR in a 6%-inflation world is genuinely 5.7% a year.

Frequently asked questions

What is a good CAGR for an investment in India?
Context is everything: FDs deliver 6–7.5% guaranteed, large-cap equity funds have averaged 11–13% over long periods, and inflation eats about 6%. So a “good” CAGR is one that beats inflation meaningfully after tax for the risk taken — 12%+ over a decade is strong for equity; 8% is excellent for a guaranteed instrument.
What is the difference between CAGR and absolute return?
Absolute return ignores time: ₹1L → ₹2L is “100%” whether it took 3 years or 15. CAGR spreads the growth evenly per year — 26% vs 4.7% in those two cases — which is why funds are compared on CAGR and only marketing banners use absolute returns for long periods.
Why does my SIP not match the fund’s CAGR?
Because your money did not all arrive on day one. Each SIP instalment compounds for a different length of time, so your personal return (XIRR) differs from the fund’s point-to-point CAGR — often lower in late rallies, higher when you accumulated through a dip. Both numbers are correct; they answer different questions.
Can CAGR be negative?
Yes — it annualises losses just as smoothly. ₹2L falling to ₹1L over 5 years is −12.94% a year. Negative CAGR over long periods is the quiet red flag behind many “it will recover” holdings; annualising the damage makes the decision clearer.
How does the rule of 72 relate to CAGR?
Divide 72 by the CAGR to estimate doubling time: at 14.87%, 72 ÷ 14.87 ≈ 4.8 years — matching the ₹1L → ₹2L in 5 years example. It is a mental shortcut for the same exponential the calculator computes exactly.

Related calculators

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Lumpsum

See what a one-time mutual-fund investment could grow to, with a year-by-year growth chart at your assumed return.

Inflation

See what today’s money will cost — and what it will still buy — years from now, at any assumed inflation rate.

Disclaimer: Eternexa is an independent app and is not affiliated with, endorsed by, or representing the Income Tax Department, the Government of India, or any government entity, and does not provide official government services. This calculator gives an estimate for general information only — it is not financial, investment or tax advice. Tax and finance figures follow FY 2026-27rules and are based on publicly available information from official sources such as incometax.gov.in and epfindia.gov.in. Always verify important numbers with the official source or a qualified professional before acting on them.