CAGR calculator
CAGR (compound annual growth rate) is the single yearly rate that turns a starting value into an ending value over a number of years, as if it had grown at the same pace every year.
The steady yearly growth rate between a starting and an ending value
- Grew by
- +150.00%
- Times the start
- 2.50
At a steady 20.11% a year
- Starting value
- Growth
What if
Over 2 fewer years
+35.72%
15.61 points higher
Over 5 more years
+9.60%
10.52 points lower
Ending 20% higher
+24.57%
4.46 points higher
How it is worked out
CAGR = (ending value ÷ starting value)^(1 ÷ years) − 1
It describes one sum from start to end. For money added or taken out along the way, use XIRR.
In Excel or Google Sheets: =(ending/starting)^(1/years)-1, or the built-in =RRI(years, starting, ending), which gives the same rate.
About CAGR calculator
The CAGR calculator works out the compound annual growth rate: the single yearly rate that turns a starting value into an ending value over a set number of years, as if it had grown at the same pace every year.
The CAGR formula
CAGR stands for compound annual growth rate. It is the ending value divided by the starting value, raised to the power of one divided by the number of years, minus one. Written out: (ending value ÷ starting value)^(1 ÷ years) − 1. The result is a percentage a year.
A worked example
A sum of ₹1,00,000 that reaches ₹2,50,000 in 5 years has grown 2.5 times. Raising 2.5 to the power of 1 ÷ 5 gives 1.2011, so the CAGR is 20.11% a year. Growing at that rate for five years takes ₹1,00,000 to ₹2,50,000, which is how the calculator draws its year-by-year chart.
The same page shows the total growth (150.00% here) and the multiple of the starting value (2.50), so the single yearly rate can be read beside the whole gain.
What the calculator takes
It works out either the CAGR or the ending value at a given CAGR. It takes a starting value from ₹100 to ₹10,00,00,000, an ending value in the same range, and a period from 1 to 50 years. It then shows three what-if cases: two years fewer, five years more, and an ending value 20% higher, each with its CAGR and the difference in percentage points from the main result.
CAGR and XIRR
CAGR describes one sum, from one start to one end. When money is added or withdrawn along the way, as in a monthly SIP, the amounts sit in the account for different lengths of time, and CAGR cannot weigh that. XIRR is the rate that accounts for each amount and its date, and the site has a separate XIRR calculator for it.
What CAGR leaves out
CAGR is smoothed. A value that falls 30% in one year and rises sharply in the next can show the same CAGR as one that rose evenly, because only the two end points and the length of time are used. It does not show the path between them, the risk taken or any year's actual return.
The result is only as complete as the values entered. A share price at the start and end leaves out dividends, and the figures are before tax, fees and inflation.