# CAGR Calculator | Calculate Compounded Annual Growth Rate

Finance For Beginners This CAGR Calculator helps you estimate the Compounded Annual Growth Rate of your investment based on

• Initial value
• Final value &
• Number of years

## What is the formula used in the CAGR calculator?

The formula used is as below

## Examples of CAGR calculator usage

### To calculate CAGR returns from an investment

Most investing sites use CAGR for showcasing returns. As an example, say after a 3-year run, your investment of 1,00,000/- in a mutual fund grew to 1,30,000/-

Using the calculator, you can realize that your CAGR return was 9.14%. You can get the 3-year and 5-year returns of mutual funds from this link here.

### To calculate how your real estate investment has grown

Say an apartment you purchased in 2008 for 50 Lakhs (50,00,000), is worth 1.6 Crores in 2020. This growth was over a 12 year period.

Using the calculator above, you can see that the CAGR return was 8.29%.

## Other Types of Returns Typically Used

There are three basic types of returns you could come across while evaluating investments.

#### Absolute Return

This is the growth an asset has provided with no relation to time. For example, an investment may have provided you 100% absolute returns, but if that return was only achieved over a period of 20 years, it would still be a poor investment. Therefore, absolute return alone is an incomplete way to judge an investment’s potential.

#### Annualized Return

This is simply the absolute return over a period of one year. If an investment of Rs. 1000 became Rs. 1150 in one year, your annual return is 15%.

#### Average Return

An average return is another terrible way to judge investments.

Assume an investment of Rs. 1000 provided you an absolute return of 100% the first year, which means your investment would be worth Rs. 2000. But the following year, it lost 50% of its value, taking the investment’s worth back to Rs. 1000. Technically, you will have received an average return of (100+(-50))/2, which is 25%. Your annualized return, however, is actually zero.

If you’re looking for Reverse CAGR Calculator, you can find one here.

Good luck. And Happy moneyplanting.

Vinod

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