Determine the Compound Annual Growth Rate to evaluate historic investment performance.
Absolute Growth
₹1,50,000
Total Growth
150.0%
CAGR (Compound Annual Growth Rate) is the smoothed, annualized rate at which an investment would have grown if it had grown at a steady rate every year, rather than the actual bumpy year-to-year path it took.
It's the standard way to compare the performance of different investments, funds, or time periods on a like-for-like basis.
Absolute return is the total percentage gain over the whole period, with no regard for time. CAGR spreads that same growth into a single, smoothed annual rate, making different investments and time periods comparable.
Yes — if the final value is lower than the initial value, CAGR will be negative, reflecting an overall loss annualized across the period.
They're closely related — CAGR is a specific way of computing an annualized return assuming smooth, consistent compounding, ignoring year-to-year volatility.