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Calculate the Compound Annual Growth Rate of your investments. A crucial metric to understand the true annualized return of any volatile asset like Stocks or Real Estate.
Formula
CAGR = (Final / Initial)^(1 / Years) - 1
CAGR
24.573
Compound Annual Growth
Absolute Return
200
Total percentage gain
Total Profit
₹2,00,000
Net gain in value
Money Multiplied
x3
Times initial capital
* This curve represents the steady mathematical smoothing of growth over the given tenure. Real-world returns, especially in equities, are typically volatile and non-linear.
CAGR smooths out the volatility of returns to give you a single annual growth rate.
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Book Free ConsultationThe ultimate metric for investors. CAGR strips away the noise and volatility of the stock market to give you a single, smoothed-out annual return rate. It is the only reliable way to compare different investments side-by-side.
If Reliance went from ₹1,000 to ₹3,000 over 5 years, and TCS went from ₹1,500 to ₹3,500 over 4 years... which was better? Use CAGR to find out their true annualized speed.
People often brag 'I bought this plot for 10 Lakhs in 2005 and sold for 50 Lakhs today!'. Sounds massive, but practically over 20 years, that is only an 8.3% CAGR — not much better than an FD.
Companies use CAGR extensively to report revenue, profit, and user growth to investors during quarterly earnings to demonstrate steady long-term compounding.
If a friend tells you they made a 200% profit, it sounds impressive. But if it took them 15 years to achieve it, their money only compounded at 7.6% CAGR. Without time context, absolute returns are deeply misleading marketing metrics often used to trick amateur investors. Always ask: "Over how many years?"
Limitation: CAGR assumes a smooth growth path, which never happens in reality. It hides intra-period volatility. Use Standard Deviation or Max Drawdown alongside CAGR for a complete risk picture.
For SIPs: Do NOT use CAGR for SIP returns. Use XIRR instead. CAGR only works for single lump-sum entry and exit points.
Disclaimer: Past CAGR does not guarantee future performance. Historical returns are for reference only. Investment decisions should account for risk tolerance, inflation, and time horizon.
Now that you understand true returns, plan your investments: