CAGR Calculator

Understanding CAGR

CAGR (Compound Annual Growth Rate) is a crucial metric for evaluating the performance of your investments over a specific period. It provides a standardized way to compare investment returns, regardless of the volatility experienced during those years.

How CAGR is Calculated:

• Step 1: Determine the initial investment value.
• Step 2: Determine the final investment value.
• Step 3: Determine the number of years between the initial and final values.
• Step 4: Use the CAGR formula: CAGR = (Ending Value / Beginning Value)^(1/Number of Years) - 1

Why Use a CAGR Calculator?

Calculating CAGR manually can be time-consuming and prone to errors. A CAGR calculator simplifies the process, allowing you to quickly determine the growth rate of your investments.

Benefits of Using CAGR

• Accurate Performance Measurement: CAGR provides a precise measure of investment growth, considering the compounding effect.
• Investment Comparison: Compare the performance of different investment options using CAGR.
• Goal Setting: Set realistic investment goals based on historical CAGR data.
• Risk Assessment: Evaluate the risk-adjusted returns of your investments.

How to Use a CAGR Calculator?

Most online CAGR calculators follow a similar format:

• Input the initial investment amount.
• Enter the final value of the investment.
• Specify the number of years for the investment period.
• Click the “Calculate” button.

The calculator will display the CAGR as a percentage.

Example of CAGR Calculation

If you invested ₹100,000 and its value grew to ₹200,000 over 5 years, the CAGR would be approximately 14.87%.

Note: CAGR is a useful tool for evaluating past performance but doesn’t guarantee future returns. It’s essential to consider other factors like market conditions, economic indicators, and individual risk tolerance when making investment decisions.