CAGR Calculator
The CAGR calculator is designed to help you calculate your investment's average annual growth rate over time. With just the starting value, ending value, and the number of years, you can quickly understand how much your investment has performed over time.
Initial investment
Final investment
Duration of investment
Initial investment
Final investment
Initial amount
₹ 5,000
Final Amount
₹ 25,000
CAGR
37.97 %
What Is CAGR?
CAGR stands for Compound Annual Growth Rate. It measures the average yearly growth of an investment over a set period. It shows how much the value of the investment increases on average each year, assuming steady growth. CAGR takes into account the effect of compounding, meaning each year’s growth is added to the previous year’s value.
What Is a CAGR Calculator?
A CAGR (Compound Annual Growth Rate) calculator is an online tool used to measure how much an investment has grown, on average, each year over a time period. This includes specific tools like the CAGR calculator for SIP, which focuses on systematic investment plans. It assumes that the growth has been consistent year after year, even if actual returns have varied.
To use the calculator, simply enter three key details: the initial value of your investment, its final value, and the number of years you held the investment. The calculator then gives you the CAGR, which shows how efficiently your investment has grown annually.
This is useful when comparing different investments over time, as it provides a standardised growth rate that smooths out short-term market fluctuations, giving you a clearer picture of long-term performance.
What Is the CAGR formula?
To calculate the Compound Annual Growth Rate (CAGR), you need three inputs: the beginning value, the ending value, and the number of years the investment was held.
The formula is:
CAGR = [(Ending Value / Beginning Value) ^ (1 / Number of Years)] - 1
Where:
- Beginning Value is the initial investment amount.
- Ending Value is the final value of the investment.
- Number of Years is the total period the investment has grown.
For example: If you invested ₹10,000 in 2017, and it grew to ₹20,000 by 2024, the investment period is 7 years. Using the formula:
CAGR = [(20,000 / 10,000) ^ (1 / 7)] - 1 = 0.1041
Thus, the CAGR is 10.41%, meaning the investment grew at an average rate of 10.41% annually over those 7 years.
How to Use Kotak Neo' CAGR Calculator
Using Kotak Neo' CAGR calculator is simple. Follow these steps to calculate the Compound Annual Growth Rate (CAGR) of your investment:
Enter the initial investment amount you invested. Let’s say ₹10,000. Enter the current value of your investment or the value at the end of the period you want to measure. Here, let’s take ₹18,000. Lastly, enter the total years your investment has been held, say 5 years.
Once you've entered these values, the calculator will automatically compute the CAGR, showing you your investment's average annual growth rate over the selected period.