Calculate the Annualized Growth Rate of Your Investment
1. Purpose
A CAGR (Compound Annual Growth Rate) calculator helps you understand how fast an investment has grown annually, assuming steady growth over a period of time.
It answers a simple but important question:
“What was the average yearly return on my investment?”
This tool is meant for:
- Evaluating past investment performance
- Comparing different investments
- Understanding long-term growth rates
2. What is CAGR (In Simple Terms)
CAGR represents the smoothed annual growth rate of an investment over a specific time period.
It does not show:
- Year-to-year volatility
- Interim ups and downs
It shows:
- A single annual growth rate that connects the start value to the end value
👉 CAGR is best used for comparison, not prediction.
3. When CAGR is Useful
CAGR is commonly used when:
- Comparing mutual funds, stocks, or portfolios
- Evaluating long-term investment performance
- Measuring growth over multiple years
- Comparing returns across different asset classes
It is especially useful when investment returns are uneven across years.
4. How the CAGR Calculator Works
The calculator uses the standard CAGR formula:
CAGR = (Ending Value / Beginning Value)^(1 / Years) − 1
Assumptions:
- Growth is measured over full years
- No intermediate cash flows are considered
- Dividends, taxes, and inflation are ignored
5. CAGR Calculator – Inputs
Beginning Value (₹)
Initial value of the investment
Ending Value (₹)
Final value of the investment
Time Period (Years)
Total duration of the investment
👉 Tip: Use exact dates converted into years for more accurate results
6. Calculator Output
CAGR (%)
The annualized growth rate of the investment over the given period
7. How to Interpret CAGR Results
- Higher CAGR indicates stronger long-term growth
- CAGR smooths volatility and simplifies comparison
- Two investments with the same CAGR may have very different risk profiles
- CAGR does not reflect interim losses or drawdowns
👉 Always combine CAGR analysis with risk assessment
8. Common Mistakes to Avoid
- Using CAGR for short-term investments
- Ignoring volatility and risk
- Comparing CAGR without matching time periods
- Assuming CAGR guarantees future returns
9. CAGR vs Absolute Returns
CAGR
- Annualized return
- Best for long-term comparison
- Accounts for time period
Absolute Return
- Total percentage gain
- Ignores time duration
- Less useful for comparison
👉 CAGR gives context; absolute return gives scale
10. Who Should Use This Calculator
Suitable for:
- Long-term investors
- Comparing mutual funds or stocks
- Reviewing portfolio performance
Not suitable for:
- Day trading analysis
- Short-term speculation
- Predicting future returns
11. Inflation Reality Check
A high CAGR does not always mean high real returns.
Always consider:
- Inflation-adjusted (real) returns
- Purchasing power over time
👉 Nominal growth can be misleading without inflation context
12. Disclaimer
This CAGR calculator provides illustrative results only.
Actual investment performance varies due to market conditions.
Samnidhi Insights does not provide investment advice or recommend specific securities.
13. CAGR Formula (For Reference)
CAGR = (EV / BV)^(1 / n) − 1
Where:
- EV = Ending Value
- BV = Beginning Value
- n = Time period in years
Example:
Beginning Value: ₹1,00,000
Ending Value: ₹2,50,000
Time Period: 5 years
CAGR ≈ 20.1% per year