CAGR Calculator
Calculate the Compound Annual Growth Rate (CAGR) of your investment, adjusted for inflation.
CAGR stands for Compound Annual Growth Rate, a metric used to measure the average annual growth of an investment over a specified period, assuming the profits are reinvested at the end of each year. It provides a smoothed rate of return, eliminating the effects of volatility and offering a clear view of an investment’s performance over time.
CAGR Formula:
CAGR = (Final Value / Initial Value) ^ (1 / Number of years) – 1
Example: Imagine you invested ₹10,000 in a mutual fund, and after 5 years, the value of your investment grew to ₹16,105.
The CAGR would be calculated as:
CAGR=(16105/10000)^(1/5)-1=0.1or10%
Why is CAGR Important?
- Comparison: Helps compare the performance of different investments on a standardized basis.
- Consistency: It smooths out yearly fluctuations to show the average growth rate.
- Financial Planning: Useful for setting realistic investment goals and evaluating long-term strategies.
Frequently Asked Questions: CAGR Calculator
What is CAGR?
CAGR (Compound Annual Growth Rate) is the rate at which an investment grows annually over a specified period, assuming the investment compounds over time. It provides a smooth annualized rate of return, making it easier to compare different investments.
How to calculate CAGR?
To calculate CAGR, you need three key values: the initial investment value, the final investment value, and the number of years over which the investment has grown.The formula to calculate CAGR is:
CAGR = (Final Value / Initial Value) ^ (1 / Number of years) – 1
Enter these values in our calculator to instantly get the CAGR percentage.
Why should I use a CAGR calculator?
A CAGR calculator simplifies the process of determining the annual growth rate of an investment. It’s a reliable way to evaluate the performance of your investments over time, eliminating fluctuations and providing a clear, long-term view.
What is a good CAGR percentage?
A “good” CAGR depends on your investment goals and the industry in question. Generally, a higher CAGR indicates better returns, but it’s essential to compare it with market standards and inflation rates to evaluate whether your investment has outperformed the market.
Is CAGR the same as annual return?
No, CAGR represents the consistent annual growth rate over a period, assuming the investment compounds. An annual return shows the performance of an investment over one year and may fluctuate from year to year, whereas CAGR smooths out these variations.
Can I use the CAGR calculator for different currencies?
Yes, the CAGR calculator works regardless of currency. Whether your investment is in INR, USD, or any other currency, as long as the initial and final values are in the same currency, the CAGR result will be accurate.
Does the CAGR calculator account for inflation?
Yes, this CAGR calculator on IPO Reporter calculate Real CAGR adjusted for inflation
Can I use this calculator for non-financial metrics?
Yes! The CAGR formula is not limited to investments. You can use it to calculate the growth rate of anything over time—such as population growth, sales growth, or even website traffic growth.
If you have any other questions or need further assistance using our CAGR calculator, feel free to ask in the comment section below.
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