CAGR smooths the path completely — it says nothing about volatility along the way, and assumes no money was added or withdrawn.
CAGR
20.1%
- Absolute return
- 150%
- Gain
- ₹1,50,000
Total growth, ignoring how long it took
What CAGR is
CAGR = ((Final ÷ Initial)^(1 ÷ years) − 1) × 100. It is the constant annual rate that would have produced the same ending value — a way of comparing investments held for different lengths of time on the same scale.
It is not the average of the yearly returns. An investment that gains 100% then loses 50% is exactly where it started: an arithmetic average of +25% a year, and a CAGR of 0%. The CAGR is the one that is telling the truth.
What CAGR hides
Everything about the journey. Two investments with an identical 12% CAGR can have wildly different experiences — one drifting steadily upward, the other halving in year three and recovering. If you might need the money at an unplanned moment, that difference is the only thing that matters, and CAGR is silent on it.
It also assumes nothing was added or withdrawn. If you invested more along the way, CAGR is the wrong measure and XIRR is the right one.
Common questions
It depends entirely on the asset. Over long periods, Indian equity indices have delivered roughly 11–13%, debt around 6–8%, and inflation has run near 5–6%. A CAGR below inflation means the investment lost purchasing power however positive the number looks.
Related calculators
SIP
Put in what you invest each month and the return you expect, and see what the SIP is worth at the end — split into the money you actually paid in and the growth on top.
Lumpsum
One amount, invested once, left to compound. See what it becomes and how much of that is growth rather than your own money.
Inflation
What today's rupee is worth later, and what today's expense costs later. The same arithmetic, pointed in both directions.
Compound interest
Interest on the interest. Choose how often it compounds and see what the difference is worth over the term.