CAGR formula
CAGR (compound annual growth rate) is the steady yearly rate at which an amount would have to grow, with compounding, to reach its final value: CAGR = (final value ÷ amount invested)^(1 ÷ years) − 1.
Example: ₹1,00,000 that is worth ₹1,80,000 after 5 years has an absolute return of 80% but a CAGR of 12.47% a year. Dividing 80% by 5 years (16%) overstates it, because it ignores compounding.
When to use CAGR, and when XIRR
CAGR fits a single lump sum: one investment, no top-ups or withdrawals. It's also the usual way to compare the growth of an index, a company's sales or a property's price over years. For SIPs, or any money added and taken out on different dates, use the XIRR calculator.
Results are estimates for illustration only, not financial advice. Banks and schemes may round, apply TDS or use slightly different day counts — confirm figures with your bank or employer. Written by the Welthr team; last reviewed on .