CAGR Calculator

CAGR refers to compound annual growth rate, which is a measure of how much an investment has grown over a period of time. It takes into account both the initial investment and the final value, averaging your growth rates from year to year. This metric is especially useful for long-term investments, as it smooths out fluctuations in returns over time.

Absolute value is the overall gain that an investment has made over time. Calculating absolute return is pretty simple. The absolute return formula is as follows:

Absolute Returns (%) = [(Current Value / Initial Investment Value) – 1] * 100

For instance, if you initially invest ₹1,00,000, which grows to ₹1,79,000, then

Absolute Returns = [(1,79,000 / 1,00,000) – 1] * 100

Absolute Returns = 79%

In this case, the investment has returned 79%, but we are unclear about how long it took to generate such high returns.

To elaborate, if you were given the option to either invest in Fund A, which has grown by 12% or Fund B, which has grown by 8%, would fund A necessarily be a good choice under all circumstances? It will actually depend on how long it took to generate such returns—something that a CAGR calculation can help clarify.

This is because CAGR (compound annual growth rate) would consider the growth experienced per year, instead of different number of years.

As an investor, you have to make smart decisions about your money. A CAGR calculator can help you achieve that goal. The CAGR calculator is a free calculation tool available online on the Angel One website.

Using the CAGR calculator, you can:

1. Calculate the CAGR of any investment, provided you already know the initial value, the current value, and the duration of the investment.
2. Know the CAGR, which will help you determine how fast and efficiently your investments are growing with time.
3. Knowing the rate of growth helps you evaluate which investment options are performing better compared to others.

A CAGR calculator is a free online calculator available on the Angel One website. It helps you calculate the compound annual growth rate of any investment. You just have to enter the values of the initial investment, the current value of the investment and the time taken by the investment to reach its current value. The compound annual growth rate calculator will show you the CAGR that was required to reach that level of absolute returns. The calculator is able to do so based on the compound annual growth rate formula that is working on the backend of the calculator.

The CAGR calculator helps you find the yearly rate of growth of any variable, if you already know the starting value, end value and duration. Since it shows the average growth rate over time, it smoothens out any volatility that might have happened in certain periods in order to give you a general figure. It shows you the efficiency of the growth of a variable and not just overall growth. For example, if you are an investor, you can use the CAGR calculator to check how fast your portfolio is growing over the years.

The following is the CAGR formula that is used to calculate the CAGR of an investment or any other metric that can grow over the years:

CAGR = [(End Value/Start Value)^(1/n) – 1]*100

Where,

n = Number of years

Suppose you bought some shares of a company at the beginning of 2018 at ₹10,000, held it for 5 years, and the current value of those shares in 2023, i.e. after 5 years, is ₹15,000. In that case,

Start Value = ₹10,000
n = 5
End Value = ₹15,000
CAGR = [15,000/10,000]^(⅕) -1 = 0.845
So the CAGR on your investment after 5 years would be 0.845 or 8.45 %.

In order to use the Angel One CAGR calculator online, you simply have to enter the following values into the calculator:

1. Initial investment - Enter the amount of money you had invested.
2. Final value cost - Enter the current value of the investment(s) whose CAGR you are measuring.
3. Duration of investment - Enter the number of years for which the investment was held.

After inputting these values, the compound annual growth rate calculator instantaneously gives you the CAGR for the investments for that specific period of time using the above formula.

If we take the above example of buying shares, then you simply have to take the following steps to find out the CAGR of the investment:

1. Enter the Initial Investment as ₹10,000.
2. Enter the Final Value Cost as ₹15,000.
3. Enter the Duration of Investment as 5

The CAGR calculator will automatically show you that the CAGR of that particular investment is 8.45 %.

The following are some of the advantages of a CAGR calculator:

1. Instant calculation - Once you enter the values in the required fields, the CAGR calculator immediately provides you with the CAGR value in percentage form.
2. Easy calculation and comparison - Using the CAGR calculator, you can easily find out the CAGR of multiple investments in a matter of minutes. Thereafter you can compare them based on the CAGR and find out which investment gives you the highest annual returns.
3. Free access - The CAGR calculator on the Angel One website is completely free of charge, regardless of how many times you use it.
4. Convenient - You can easily access the CAGR calculator from anywhere using a device with internet access.