Calculate the Compound Annual Growth Rate of any investment. Enter initial and final values to see annualised returns and compare against benchmarks.
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Calculate CAGR
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Nifty 50 Index: 13-14% CAGR over 20 years (historical data 2005-2025). This is the baseline for equity investors. If your stock portfolio or equity fund CAGR is below 13%, you're underperforming the index. Index funds (like Zerodha Golden or Vanguard Nifty) track this with minimal fees (~0.3%).
Sensex (BSE): 12-13% CAGR over 20 years. Slightly lower than Nifty50 due to larger-cap bias and dividend adjustments. Use this if your portfolio is BSE-heavy (older PSU stocks, banks).
Nifty Smallcap 50: 18-20% CAGR over 20 years (higher volatility). If you invest in small-cap funds, benchmark against this 18-20% range. Lower CAGR here suggests poor fund manager performance.
Debt (Government Securities): 6-7% CAGR over 20 years (low volatility). If your debt fund CAGR is under 6%, you're underperforming risk-free government bonds. Why pay an AMC fee?
Inflation in India: ~6-7% CAGR. Your total portfolio CAGR should exceed inflation + taxes. If achieving 8% CAGR in a debt fund, real return = 8% - 7% inflation - 1% tax = 0% real return (you're losing purchasing power). Shift to equity for growth.
CAGR (Use: Lumpsum Investments, Funds): Formula: (Final/Initial)^(1/Years) - 1. Best for single investment with fixed start and end. Example: bought mutual fund at NAV Rs 100, now at Rs 250 after 5 years = CAGR 20%. Simple, assumes reinvestment. Use for comparing fund performance over fixed periods.
XIRR (Use: SIPs, Monthly Investments): Internal Rate of Return - accounts for irregular cash flows. Example: SIP Rs 10K/month for 5 years at varying NAVs = XIRR 15% (accounts for each monthly investment date). More accurate for SIPs than CAGR. All mutual fund portals (Groww, Zerodha Coin) show XIRR for SIP portfolios.
Absolute Return (Use: Short-term, <1 year): Formula: (Final - Initial) / Initial × 100. Example: stock bought at Rs 100, sold at Rs 125 in 3 months = 25% absolute return. CAGR would annualise this to 140% (misleading). Use absolute return for: day trades, short-term speculation, comparing monthly/quarterly performance.
Decision Tree: Investment type = lumpsum? Use CAGR. Monthly SIP? Use XIRR. Hold period <1 year? Use absolute return. Comparing fund performance? Use trailing 1Y/3Y/5Y CAGR from factsheet.
Example 1: Equity Fund (Consistent Performer): Invested Rs 1L in a Nifty50 index fund in Jan 2020. Today (Jan 2025) = Rs 2.2L. CAGR = (2.2L/1L)^(1/5) - 1 = 18% CAGR. This beats Nifty historical 13-14% average because COVID crash in 2020 created buying opportunity. Takeaway: market crashes = buying opportunities for long-term investors.
Example 2: Debt Fund (Underperformance Case): Invested Rs 1L in a debt fund in 2020. Today = Rs 1.32L. CAGR = (1.32L/1L)^(1/5) - 1 = 5.8% CAGR. This is BELOW 6% inflation + taxes. Real return = -0.5% (losing purchasing power). Takeaway: if debt fund CAGR < inflation, move to equity or fixed deposits.
Example 3: Small-Cap Fund (High Volatility, High Growth): Invested Rs 1L in a small-cap fund in 2019. Today = Rs 3.2L. CAGR = (3.2L/1L)^(1/6) - 1 = 25.8% CAGR. This beats small-cap benchmark of 18-20%, good fund manager. But: if you invested Rs 1L in Jan 2022 (peak), today = Rs 0.85L (negative return). Takeaway: timing matters for small-caps, use SIP to smooth volatility.
Example 4: Real Estate (Illiquid, Untracked CAGR): Bought flat for Rs 50L in 2015. Today valued at Rs 85L (2025). CAGR = (85L/50L)^(1/10) - 1 = 5.4% CAGR. Below inflation! Plus: maintenance Rs 50K/year, property tax Rs 10K/year = net return even lower. Takeaway: real estate appreciation lags equities historically, best as shelter not investment.
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CAGR (Compound Annual Growth Rate) is the annual rate of return that brings an investment from its initial value to its final value over a given period, assuming profits are reinvested.
CAGR = (Final Value / Initial Value)^(1/Years) − 1, expressed as a percentage. It smooths out the effect of market volatility to show a consistent annualised growth rate.
> 20%: Excellent (rare, usually small-cap or sector bets). 12–20%: Good (equity mutual funds). 8–12%: Moderate (balanced funds). < 8%: Low (consider if it beats inflation at ~6%).
CAGR works for single investments with a fixed start and end value. XIRR handles irregular cash flows - it is the correct metric for SIPs where you invest different amounts at different dates. For evaluating a mutual fund SIP, always use XIRR. CAGR is accurate for lumpsum investments or fund performance measurement.
Nifty 50 has delivered approximately 13-14% CAGR over 20 years. A diversified equity portfolio matching or beating the index at 14-16% CAGR is excellent performance. Individual stock pickers targeting 20%+ CAGR should benchmark against the Nifty 50 total return index to assess true outperformance.
CAGR = (Current NAV divided by Purchase NAV) raised to (1 divided by Years) minus 1. Example: bought at NAV Rs 50, current NAV Rs 120, held 5 years: CAGR = (120/50)^0.2 - 1 = 19.1%. For multiple SIP instalments, use XIRR instead. Your mutual fund factsheet shows trailing 1Y, 3Y and 5Y CAGR returns.
Yes. Negative CAGR means your investment declined in value over the period. For example, CAGR of -5% means your portfolio lost 5% per year on average. It is important to evaluate CAGR over complete market cycles of 7-10 years rather than short periods that may capture only one phase of the market.
Use absolute return (percentage gain = (Final - Initial) / Initial × 100) for investments held less than 1 year, since CAGR annualises returns and can be misleading over very short periods. Example: a 20% gain in 3 months is 20% absolute return, but CAGR would show 107% — an unrealistic annualised figure. CAGR is most meaningful for periods of 2 years or more. For 1-year periods, absolute return and CAGR are identical.
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