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CAGR Calculator

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What is a Compound Annual Growth Rate Calculator?

When investing in a new asset, investors often consider how much their investment will grow over 5 years or 10 years. But do you know how much it actually grows each year? A compound annual growth rate (CAGR) calculator helps you get this without any manual effort.

PL Capital Group – Prabhudas Lilladher offers a CAGR calculator, which allows you to know the annual growth rate of your current investments. Let us understand how PL’s CAGR calculator works and how you can use this calculator to calculate the annual growth rate of your investments.

How Does a Compound Annual Growth Rate Calculator Work?

A CAGR calculator works just like other financial calculators. It has been explained in the pointers below:

1. Investors need to enter the initial investment value and their expected final value of their investments.

2. Now they have to enter their investment period, which is the total number of years they want to hold.

3. Investors can calculate the annual growth rate of their investments.

How Can a Compound Annual Growth Rate Calculator Help You?

A CAGR formula calculator can help you in various ways. Here are some of them:

1. Shows Updated Returns

A CAGR calculator always shows the updated returns of your portfolio at any time. You get a compounded return of how much your fund investment has grown.

2. Results From Different Scenarios

This calculator also helps investors evaluate the returns from different scenarios. With this, you can make sound investment decisions, like how much you should invest or how much you can increase.

3. Performance Evaluation

A CAGR calculator also helps you to analyse the performance of your chosen assets over a period of time. You can also compare different assets in your portfolio to determine which is outperforming and underperforming the average portfolio returns.

Please note that a CAGR can be beneficial when you are considering differential investment options.

How Can You Calculate CAGR?

To calculate the CAGR of your returns, follow the steps below:

1. Divide the expected value of your investment at the end of the period by the initial value of your investment, and find out the wealth creation ratio.

2. Raise the wealth creation ratio to the power of one divided by your investment tenure in years.

3. Subtract 1 from the output, and you will get the CAGR returns of your investment in decimals. You can also multiply it by 100 to get the CAGR returns in percentage.

The formula of CAGR is:
CAGR = (FV / PV) ^ (1 / n) - 1
In this formula,

  • FV = Future value of your investment
  • PV = Present value of your investment
  • n = Your investment tenure in years

    • Let us see an example to understand the formula better. For instance, you invested INR 5 lakh, which has grown to INR 9 lakh at the end of 5 years. According to the formula, the CAGR of your investment will be:

    CAGR = (9,00,000 / 5,00,000) ^ (1/5) - 1 = 12.47%

    Using this formula manually can be tricky and time-consuming. Hence, you can use the CAGR calculator on the PL Capital website and get the result within a second.

    How to Use an Online CAGR Calculator?

    Follow the steps below to use an online CAGR calculator:

  • 1. Enter the initial value of your investment.
  • 2. Enter the expected value of your investment after a particular investment tenure.
  • 3. Now enter the number of months or years you want to hold your investment.
  • 4. This CAGR calculator will show the results within a few seconds once you enter the values and submit them.

    • FAQ's on CAGR Calculator

    1. How do I calculate CAGR using an annual growth rate calculator? ›

    Calculating the CAGR of your investments using a CAGR calculator can be easy. You just need to enter the initial value and expected value of your investment after a particular investment tenure, and your investment tenure. The calculator will show the results within a few seconds.

    2. Can a CAGR investment calculator help me compare different investments? ›

    Yes, a CAGR calculator can help you analyse the returns from different investments. This helps you to make sound investment decisions.

    3. To what extent is a CAGR calculator accurate? ›

    A CAGR calculator shows accurate results when you provide correct data. However, the accuracy is limited since it does not consider market volatility or irregular cash flows.

    4. Is a CAGR calculator completely free? ›

    Yes, most of the online brokers offer a CAGR calculator for free. You just have to enter the initial and final value of your investments and your investment tenure.

    5. Can a CAGR calculator assist in comparing SIP vs lump sum investments? ›

    A CAGR calculator can definitely assist in calculating your lump sum investment returns. Therefore, it does not allow for comparing the SIP and lump sum investment returns.

    6. Can CAGR be calculated for pre-tax and post-tax returns? ›

    Yes, you can calculate CAGR for both pre-tax and post-tax returns, as long as your investment’s initial and final values reflect the different scenarios. To calculate the pre-tax CAGR, you have to use the final value of your investment before applying any taxes. Similarly, for post-tax CAGR, you use the final value of the investment after the deduction of taxes.

    7. Can a compound annual growth rate calculator help me set realistic financial goals? ›

    Yes, a CAGR calculator can help you set realistic financial goals since it analyses the performance and annual growth rate of your investments.
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