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CAGR Calculator

Plan your investment growth with confidence using our CAGR Calculator, providing clear insights into your compounded annual growth rate.

Initial Investment

1K

1Cr

Final Investment

1K

1Cr

Investment Duration

Yr

1Y

40Y

CAGR

%

Our Compound Annual Growth Rate (CAGR) calculator helps you discover the growth of your money over a specific period. Read on to know how.

CAGR calculator: An overview

CAGR is a measure of the average yearly growth rate of investments over a certain period. It is a metric that helps investors determine the profitability of an investment over time. While an important tool, CAGR is tough to calculate manually. That’s why we designed the calculator above to help you do the math and assess your investment and business regularly.

About the CAGR calculator

The CAGR calculator is a tool that can help calculate the compounded annual growth rate for investments. It lets you determine the average year-on-year return on your investment.

 

To begin calculating, simply enter the initial investment amount, the maturity or redemption amount, and the number of years in the fields provided. The calculator gives you the CAGR percentage in a few seconds.

How to calculate the CAGR

The easiest way to calculate the CAGR of an investment is with our calculator. Alternatively, though, if you want to figure out the math manually, use the formula below. 

 

CAGR = [(Ending Value/Beginning Value) ^ (1/N)]-1

 

Here

CAGR = Compound Annual Growth Rate

Ending value = Maturity value or redemption value of investment 

Beginning value = Initial investment value

N = Investment period in terms of years

 

Now let’s see how you could put the formula to use with an example. Suppose you invested ₹1,00,000 in a mutual fund scheme 5 years ago. If you were to redeem it today, you will get ₹4,50,000. The CAGR here would be calculated as follows.

CAGR = [(4,50,000/1,00,000)^(⅕)]-1 = 0.3509 or 35.09%

How to use the CAGR calculator

The Lemonn CAGR calculator is built to be user-friendly. Simply key in the requisite details, and the calculator will crunch the numbers for you. The details you will be asked to enter are: 

  • Your initial investment value
  • The maturity value 
  • Investment period in years 

 

And that’s it. You will have the CAGR percentage at the click of a button.

What are the benefits of a CAGR calculator?

The CAGR calculator is a useful tool because it simplifies the calculation of CAGR, an important metric to evaluate investments. In this section, let’s take a look at the benefits of CAGR and, therefore, in turn, this CAGR calculator.

  • Evaluate the growth of a business

Absolute returns can be misleading. This is because calculating absolute returns on a long-term investment may yield a very high value that does not represent the asset’s true fortunes. The CAGR, on the other hand, will break down your return on a year-on-year basis, helping you evaluate your investment’s performance.

 

For example, suppose you invest ₹1,00,000 in a mutual fund scheme that it is yielding ₹4,50,000 after 5 years. Here, the absolute rate of return would be 350%. But the CAGR would amount to a more realistic 35.09%.

 

Calculating CAGR instead of absolute returns is thus a better bet. And as far as making the evaluation process simple goes, the CAGR calculator will do the job.

 

  • Helps make long-term capital influx plans

If you plan to attract capital for your business, and have to evaluate the growth potential of your business, you will need the average year-on-year growth. This is where our CAGR calculator will help.

 

  • Calculate the gains on your investment

If you are calculating gains on your portfolio or a mutual fund scheme, CAGR would be the right way to go. That’s because it will give you an estimate of how much your investments earned year on year. And using a CAGR calculator is the best way to go about doing the math. 

 

  • Provides a detailed outlook of your ROI

Return on Investment (RoI) is an important decision-making parameter when evaluating a business proposal or an investment opportunity as it showcases the percentage increase or decrease on the amount you invested. Calculating CAGR will give you the year-on-year RoI. These CAGR calculations are made easy with the calculator above.

 

  • Helps to compare the performance of multiple investment products

When there are tons of investment opportunities in the market, how do you pick one? CAGR is how. It helps you compare your options and select the best opportunity. And the task of calculating the CAGR with our calculator makes the comparison a cakewalk.

 

  • Easy to use

The Lemonn CAGR calculator is super easy to use. Just need to key in the requisite values, and the CAGR percentage will be presented to you in seconds.

Conclusion

CAGR is an important financial decision-making tool. You can calculate the CAGR value for your investment at the tips of your fingers by inputting the values in the calculator above. Once you have the percentage number, you can decide on where to invest and if to invest or not. 

FAQs

1.What is CAGR?

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CAGR is a measure of your investments' average yearly growth rate over a certain period. It tells you the average rate of return you have earned on your investments every year.

2.What does 10% CAGR mean?

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A CAGR percentage of 10% will mean that your investment will yield you a 10% return per year for the fixed investment time frame.

3.Why is CAGR important?

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CAGR is important as it will give you the average year-on-year return for your investment.

4.Is the CAGR calculator free to use?

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Yes, the CAGR calculator is free to use and had no upper usage limit.

5.What is a good CAGR percentage?

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There is no set ideal CAGR percentage. A healthy CAGR percentage will depend on the type of investment or business.

6.Does the CAGR calculator reflect investment risks?

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No, the CAGR calculator doesn't reflect investment risks. Investors will have to do their research before making an investment decision.

7.Can you use CAGR for months?

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Yes, CAGR can be calculated for months. The compounded annual growth rate has annual in it, but here annual stands for a particular time period. The formula is capable of calculating compounded growth rate for months, quarters, or years.

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