Annualized Return Calculator
Calculate the Compound Annual Growth Rate (CAGR) — your investment's true annualized return — based on the starting value, ending value, and holding period.
How to use the Annualized Return Calculator
- Enter the initial investment value.
- Enter the final value of the investment today or at sale.
- Enter the number of years you held it (decimals like 2.5 are fine).
- Click Calculate to see CAGR, total return and absolute gain.
Formula used
Worked example
₹1,00,000 grows to ₹2,00,000 in 5 years
Final ÷ Initial = 2
21/5 = 1.1487
CAGR = 14.87% per year; total return = 100%; gain = ₹1,00,000
Why CAGR beats simple average return
If a fund gains 50% one year and loses 50% the next, the simple average is 0%, yet ₹100 becomes ₹150 and then ₹75 — a real loss. CAGR captures this by assuming smooth compounding, which is why mutual fund factsheets, stock comparisons and business growth reports quote CAGR rather than average yearly returns. For investments with many deposits and withdrawals (like a SIP), use XIRR instead.
Tips for accurate results
- Use exact holding periods: 18 months = 1.5 years.
- Include dividends in the final value for a true total return.
- Compare CAGR with inflation to see your real return.
Frequently Asked Questions
For Indian equity over long periods, 10–14% is often considered good; FDs typically give 6–7.5%.
Only for a single lump-sum investment. With multiple cash flows, XIRR is accurate.
Yes, if the final value is lower than the initial value.
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Content reviewed by Vinod, Easy Smart Calculator · Last updated October 2026
Frequently Asked Questions
What is CAGR?
CAGR (Compound Annual Growth Rate) represents the smoothed annual growth rate of an investment over a period, assuming profits are reinvested each year.
How is CAGR different from total return?
Total return shows the overall percentage gain, while CAGR normalizes that gain into an annual rate, making it easier to compare investments held for different time periods.
Why is CAGR useful for comparing investments?
CAGR allows apples-to-apples comparison between investments with different holding periods, showing which one truly grew faster on an annualized basis.