Download the App Now!
CalculatorsCAGR Calculator
CAGR Calculator
Compound Annual Growth Rate (CAGR) measures the mean annual growth rate of an investment over a specified time period, accounting for compounding effects.
Start SIP in Mutual Funds
What is CAGR Calculator?
CAGR or Compounded Annual Growth Rate is commonly used in finance and investment to assess and analyse the returns of stocks, mutual funds, and investments. CAGR is a measure of the annual growth rate of an investment over a specified period, assuming the value is compounding over the specified period. CAGR provides a smooth representation of the growth investment, especially when the growth rate is not considered over the entire period. CAGR takes into account the compounding effect. This means that returns are not calculated on just a principal but also on the interest accumulated over time.
Origin of CAGR
The usage of the CAGR concept and usage of compound interest can be traced back to ancient civilizations such as Babylonians and Egyptians. The principles of compounding have been understood for centuries. The exact date of the origins of CAGR remains unclear and it cannot be attributed to one specific date. CAGR became increasingly popular in the latter half of the 20th century to evaluate investment performance.
CAGR Formula
The formula for Compounded Annual Growth Rate (CAGR) is -
CAGR = [(Ending Value/Beginning Value)^1/n] - 1
Where:
Ending value - The final value of the asset or investment at the end of the period
Beginning Value - The initial value of the asset or investment at the beginning of the period
n - Number of years in the period
This formula calculates the amount of investment in which the investment would have grown in a specified period, assuming it grew at a steady rate, compounded annually.
CAGR = [(Ending Value/Beginning Value)^1/n] - 1
Where:
Ending value - The final value of the asset or investment at the end of the period
Beginning Value - The initial value of the asset or investment at the beginning of the period
n - Number of years in the period
This formula calculates the amount of investment in which the investment would have grown in a specified period, assuming it grew at a steady rate, compounded annually.
How to calculate Compounded Annual Growth Rate (CAGR)?
Here are a few easy steps to guide you using the calculator:
Going by the above method, here's the detailed breakdown -
- Step 1: Find the growth factor:
The growth factor is nothing but the value derived by dividing the Ending value with the Beginning value. - Step 2: Calculate CAGR:
Take nth root of the growth factor figure. Meaning, if the growth rate figure comes Here, the nth root means the number of years. Then subtract the number by 1. The resulting figure (in %) is nothing but the CAGR.
Let us take numbers and calculate the Compounded Annual Growth Rate -
I have an amount of Rs. 10,000. I want to know what % it would take, compounded annually, to reach a figure of Rs. 16,000 in 5 years' time.
Going by the above method, here's the detailed breakdown -
- Step 1: Calculating the growth factor:
Dividing 16,000 (Ending Value) with 10,000 (Beginning Value) gives us a growth factor of 1.60. - Step 2: Calculating the CAGR:
Take the 5th root (5√1.60) of the growth factor figure. This figure comes to 1.09856. After subtracting, it comes to 0.09856. After converting the same in %, the figure comes to 9.86%.
From the above, it can be said that it would take an annual compounding of 9.86% to reach Rs. 16,000 from Rs. 10,000 in 5 years.
Benefits or Advantages of CAGR
Easily Understandable:
The CAGR is a straightforward metric that can be easily understood by investors, stakeholders, and analysts without any pre-requisite of any advanced financial knowledge.Effective for Marketing or Reporting:
CAGR can be used in marketing materials and financial reports to highlight and communicate growth achievements. Present growth rates in terms of CAGR can attract investors or investors seeking consistent growth opportunities. It should also be noted that CAGR does not take volatility into account.How to use the Dhan CAGR Calculator?
With the advent of tools online, CAGR can be calculated in just seconds. Here's a simple guide on how you can calculate CAGR online -
- Step 1: Add the amount to the initial investment
- Step 2: Add final maturity value
- Step 3: Add the duration of the investment
Frequently Asked Questions
01
No. The percentage remains constant throughout the period in CAGR.
01
Unlike annualised returns, the interest amount of returns in CAGR remains different for different years and keeps on increasing with each passing year.
01
If you are an investor, CAGR is good for you if the % return is higher than annualised returns.
01
CAGR tells you the rate at which an investment grows in a specified period. 10% CAGR means you will earn a 10% return on your principal amount. And in the next year, the return will be calculated on the total amount (principal amount + interest earned) and so forth
01
A CAGR cannot be negative. A negative CAGR does not exist.
01
It completely depends on the risks involved. If the risks involved are similar and the % is the same, it is recommended to go for a CAGR.
Join us on
Follow us on
Partner with us
built with love
for Indians who love to invest & trade
we are part of Raise Financial Services
Explore
*All securities mentioned on this website are exemplary and not recommendatory.
We are bullish on India, we are bullish on India's prospects to be one of the largest economies in the world. We believe that the stock market provides a unique opportunity for all of India's traders and investors to participate in the growth story of the country.
Yet, most investing & trading platforms in India have remained more or less the same over the past decade. Times have changed and retail traders and investors have become smarter about managing their trades and money. Modern traders & investors require an online trading platform that helps them keep up with the technological advancements of our time.
That's why we're building Dhan - to help you trade, to help you invest, and to help you participate in India's growth stock via the stock market with awesome features and an incredible experience.
©2021-2024 Moneylicious Securities Private Limited. All rights reserved. CIN - U74999WB2012PTC184187 Moneylicious Securities is part of Raise Financial Services.
SEBI Stock Broker Registration No: INZ000006031 | Depository Participant (CDSL) ID: IN-DP-289-2016
Exchange Membership No. : NSE: 90133 | BSE: 6593 | MCX: 56320
Registered Office: Office No. 14D, 4th Floor, Shri Krishna Chambers, 78, Bentick Street, Kolkata - 700001, West Bengal, India.
Corporate Office: A-302, The Western Edge I, Off Western Express Highway, Borivali East, Mumbai - 400066, Maharashtra, India. Land Line: 022-43116666.
For any query / feedback / clarifications, email at help@dhan.co.
Important Links: SEBI | BSE | NSE | MCX | CDSL | SCORES | ODR Portal | Investor Charter for Stock Brokers | Investor Charter for DP | UCC Advisory | e-Voting for Shareholders
Important Information: Terms of Usage | Disclaimers | Privacy Policy | Grievances | Risk Management Policy | Risk Disclosure | Advertisement Disclaimer
Exchange Membership No. : NSE: 90133 | BSE: 6593 | MCX: 56320
Registered Office: Office No. 14D, 4th Floor, Shri Krishna Chambers, 78, Bentick Street, Kolkata - 700001, West Bengal, India.
Corporate Office: A-302, The Western Edge I, Off Western Express Highway, Borivali East, Mumbai - 400066, Maharashtra, India. Land Line: 022-43116666.
Details of client bank account
For any query / feedback / clarifications, email at help@dhan.co.
In case of grievances for any of the services rendered by Moneylicious Securities Private Limited, please write to grievance@dhan.co (for NSE, BSE and MCX) or grievancedp@dhan.co (for Depository Participant). Please ensure that you carefully read the Risk Disclosure Document as prescribed by SEBI, our Terms of Use and Privacy Policy. Compliance Officer: Mr. Manish Garg and Mobile: 8655740961 Email: complianceofficer@dhan.co To lodge your complaints using SEBI SCORES, click here.
Procedure to file a complaint on SEBI SCORES: Register on SCORES portal. Mandatory details for filing complaints on SCORES: Name, PAN, Address, Mobile Number, E-mail ID. Benefits: Effective Communication, Speedy redressal of the grievances
Disclaimer: Investment in the securities market are subject to market risks, read all the related documents carefully before investing. Brokerage will not exceed the SEBI prescribed limit
Attention investors:
- Stock brokers can accept securities as margins from clients only by way of pledge in the depository system w.e.f September 01, 2020.
- Update your e-mail and phone number with your stock broker / depository participant and receive OTP directly from depository on your e-mail and/or mobile number to create pledge.
- Check your securities / MF / bonds in the consolidated account statement issued by NSDL/CDSL every month.
Note: As a policy we do not give stock tips or recommendations and have not authorized anyone to give this on behalf of us. If you know anyone claiming to be a part of Dhan / Moneylicious / Raise or our associate companies or partners and offering such services, please report us on help@dhan.co. Important Information for Investors: To prevent unauthorized transactions in your trading / demat account, do not share your account details, credentials or any personal details with anyone. Keep your mobile number updated with your Stock Broker, Depository Participant and ensure that the same is registered with Stock Exchanges, Depository and KRAs. You will receive alerts and information on your registered mobile number / email for debit and other important transactions in your demat account directly from CDSL / Exchange on the same day. KYC is one time exercise while dealing in securities markets - once KYC is done through a SEBI registered intermediary (Stock Broker, DP, Mutual Fund, etc.), you need not undergo the same process again when you approach another intermediary. No need to issue cheques by investors while subscribing to IPO. Just write the bank account number and sign in the application form to authorise your bank to make payment in case of allotment. No worries for refund as the money remains in investor's account. This is issued in the interest of investors.
Moneylicious Securities Private Limited also known as Dhan is only an order collection platform that collects orders on behalf of clients and places them on BSE StarMF for execution. Client expressly agrees that Dhan is not liable or responsible and does not represent or warrant any damages regarding non- execution of orders or any incorrect execution of orders with regard to the funds chosen by the client or due to, but not being limited to, any link/system failure, delay in transfer of the funds on account of any unforeseen circumstances/issues in the banking system/payment aggregators or any other problems that may result in a delay in crediting the funds into the BSE Star MF's bank account.
Mutual fund investments are subject to market risks, read all scheme related documents carefully before investing. Dhan is not a distributor or agent of any mutual fund. Mutual Funds are not exchange-traded products. Any related disputes will not have access to the Exchange-investor redressal forum or arbitration mechanism. For other disclaimers please refer https://dhan.co/advertisement-disclaimer/
Download client registration documents (Rights & Obligations, Risk Disclosure Document, Do's & Don'ts) in vernacular language: BSE | NSE | MCX
Kindly, read the Advisory Guidelines of BSE | NSE | MCX for investors as prescribed by the exchange with reference to their circular dated 27th August, 2021 regarding investor awareness and safeguarding client's assets
Important Links: SEBI | BSE | NSE | MCX | CDSL | SCORES | ODR Portal | Investor Charter for Stock Brokers | Investor Charter for DP | UCC Advisory | e-Voting for Shareholders
Important Information: Terms of Usage | Disclaimers | Privacy Policy | Grievances | Risk Management Policy | Risk Disclosure | Advertisement Disclaimer
