CAGR Calculator

CAGR, or the compounded annual growth rate, measures the average annual growth of your investments over a year. The assumption when calculating CAGR is that the profits are reinvested at the end of a year. Our CAGR calculator will help you measure the growth of your investment for a specific period. 

CAGR calculator: An overview

CAGR indicates the average yearly growth of your financial investments such as mutual funds. It is a representative number and not the absolute rate of return on your investment every year as investments cannot grow at the same rate year-on-year. 

CAGR is a generally accepted way of calculating year-on-year returns. Therefore, finding a convenient way to calculate the CAGR is important. The CAGR calculator above will make the CAGR calculations easy for you.

More about our CAGR calculator

The CoinSwitch CAGR calculator is an online tool designed to calculate the compounded annual growth rate of investment. 

To compute the CAGR on your investment, key in the initial investment amount, the final, or redemption amount, and the duration of your investment. The CAGR calculator will work its magic and give you the CAGR percentage at the click of a button. 

Calculating the CAGR manually

The most convenient way to calculate CAGR is to use the calculator above. But if you want to stretch your mind, you can use the below-mentioned formula to calculate CAGR. 

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

Where:

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

For example, Mr. Z invested ₹1,00,000 in a mutual fund scheme 5 years back. The maturity value of his investment today is ₹5,50,000. His CAGR calculation will look like the following:

CAGR = (5,50,000/1,00,000)^(⅕)]-1

= 0.4068 or 40.63%

Using the CAGR calculator

The CAGR calculator is designed to be intuitive and easy to use. All you need to do is key in the below-mentioned numbers and the calculator will crunch the numbers for you. 

• Initial investment value
• The value at maturity or redemption
• The investment period in years

You are all set. You will be able to see the CAGR of your investment on your screen.

How the CAGR calculator can help you?

The compounded average growth rate is an important indicator that can help determine the growth rate of investments and businesses. The CAGR calculator will simplify the complex CAGR calculation. Here are some other benefits that the calculator can provide. 

• Learn how much your investment gained

The absolute percentage returns on an investment with a duration of more than a year can be misleading. The percentage returns might look big on paper, but that doesn’t fully indicate how the investment performed.

The CAGR will break the returns year on year, assuming that profits after each year are reinvested. This gives a more realistic picture and will help you make an informed investment or business decision. 

• Easy comparison of various investment products

There are multiple investment products available in the market. One needs to compare the products while making an investment decision. The CAGR is a good comparison variable to use when evaluating multiple investment options. 

• Evaluate business growth

The CAGR calculator can also be used by businesses to determine the growth potential of their business and ascertain the growth achieved in the past year. The capital influx needs can be based on the year-on-year growth of the business. 

• User-friendly

The CoinSwitch CAGR calculator is designed for simplicity of use. All you will need is the initial investment amount, the redemption value, and the investment duration. 

Conclusion

The compounded annual growth rate gives you the average rate of return earned by your investment year-on-year. This is how returns on mutual fund schemes are quoted. You can use the CAGR calculator to measure the CAGR on your investments.