CAGR Calculator with Inflation
Enter what an investment was worth at the start, what it's worth now, and how long you held it. You get its CAGR (the steady yearly growth rate) and the real CAGR left after inflation. Know the rate and want the end value? Use the reverse CAGR calculator.
By Hardik Vegad, founder of WealthGamma · Last updated
Your CAGR is
11.61%a year
₹1,00,000 grew to ₹3,00,000 in 10 years. After 6% inflation, your real CAGR is 5.29% a year.
Real CAGR
5.29%
Total return
200%
Money grew by
3.00×
Final value in today's money
₹1,67,518
The steady path from start to end
- Value at this CAGR
- Value in today's money
- Initial value
Year-by-year tableShowHide
| Year | Value | Gain | In today's money |
|---|---|---|---|
| 1 | ₹1,11,612 | ₹11,612 | ₹1,05,295 |
| 2 | ₹1,24,573 | ₹24,573 | ₹1,10,870 |
| 3 | ₹1,39,039 | ₹39,039 | ₹1,16,740 |
| 4 | ₹1,55,185 | ₹55,185 | ₹1,22,921 |
| 5 | ₹1,73,205 | ₹73,205 | ₹1,29,429 |
| 6 | ₹1,93,318 | ₹93,318 | ₹1,36,282 |
| 7 | ₹2,15,767 | ₹1,15,767 | ₹1,43,497 |
| 8 | ₹2,40,822 | ₹1,40,822 | ₹1,51,095 |
| 9 | ₹2,68,788 | ₹1,68,788 | ₹1,59,095 |
| 10 | ₹3,00,000 | ₹2,00,000 | ₹1,67,518 |
What is CAGR?
CAGR (compound annual growth rate) is the steady yearly rate that would take an investment from its starting value to its final value over a period. Real investments rise and fall; CAGR turns that bumpy path into one number you can compare across a stock, a fund, an FD or a house.
It answers one question: if this had grown at the same rate every year, what rate would that be?
What is the CAGR formula?
CAGR = (Final value ÷ Initial value)1 ÷ years − 1
Real CAGR = (1 + CAGR) ÷ (1 + inflation) − 1
Write rates as decimals (6% = 0.06). Real CAGR is the growth in what your money can buy, which is the number that matters for any goal.
How do you calculate CAGR?
Divide the final value by the initial value, raise it to the power of 1 ÷ years, and subtract 1. For ₹1 lakh that grew to ₹3 lakh in 10 years, the CAGR is 11.61%:
- ₹3,00,000 ÷ ₹1,00,000 = 3
- 31 ÷ 10 = 30.1 = 1.1161
- 1.1161 − 1 = 11.61% a year
- After 6% inflation: 1.1161 ÷ 1.06 − 1 = 5.29% real CAGR
What is real CAGR, and why does it matter?
Real CAGR is your CAGR after inflation, and it's the only one that tells you whether you got richer. The ₹3 lakh above sounds like triple the money, but after 10 years of 6% inflation it buys what ₹1,67,518 buys today: a real CAGR of 5.29%, not 11.61%.
Here's what growing your money over 10 years really means, before and after 6% inflation:
| In 10 years, money becomes | CAGR | Real CAGR |
|---|---|---|
| 2 times | 7.18% | 1.11% |
| 3 times | 11.61% | 5.29% |
| 5 times | 17.46% | 10.81% |
| 10 times | 25.89% | 18.77% |
Doubling your money in 10 years is a 7.18% CAGR, but only about 1% a year in real terms. That's roughly what an FD does after inflation, before tax.
How is CAGR different from total return?
Total return (also called absolute return) is how much an investment grew overall; CAGR spreads that over the years. ₹1 lakh to ₹3 lakh is a 200% total return, which sounds huge, but over 10 years it's 11.61% a year. Over 3 years, the same 200% would be a 44.22% CAGR.
Always compare investments by CAGR, not total return, unless they were held for the same time.
Why is CAGR better than average annual return?
Because averages ignore compounding. Say ₹1 lakh gains 50% in year 1 (₹1.5 lakh) and loses 50% in year 2 (₹75,000). The average return is 0%, yet you've lost ₹25,000. The CAGR tells the truth: −13.40% a year.
Should you use CAGR or XIRR?
Use CAGR for one amount invested once, like a lumpsum or a stock you bought in one go. Use XIRR when money went in or came out at different times, like a SIP, top-ups or partial withdrawals. XIRR weighs each amount by how long it was invested; CAGR can't. What is XIRR? explains it with an example.
How do you calculate CAGR in Excel?
With the initial value in B2, the final value in C2 and the years in D2, type =(C2/B2)^(1/D2)-1, or use the built-in function =RRI(D2, B2, C2). Format the cell as a percentage. For real CAGR, divide (1 + CAGR) by (1 + inflation) and subtract 1.
What is a good CAGR?
One that clearly beats inflation after tax. The RBI targets 4% consumer inflation within a band of 2% to 6%, so a CAGR near 7% barely grows your buying power once tax is paid. For equity held 10 years or more, 10% to 12% is a solid result; judge a fund or stock against its benchmark over the same period, not against a single great year.
What does CAGR not tell you?
It's one smooth number for a bumpy ride. Three things it hides:
- Volatility. Two investments with the same CAGR can have very different falls along the way.
- Money added or taken out. CAGR only looks at the start and end values; use XIRR when cash moved in between.
- The period you pick. Starting at a market low or high changes CAGR a lot. Check several periods, or rolling returns.
Frequently asked questions
What is the CAGR formula?
CAGR = (final value ÷ initial value)^(1 ÷ years) − 1. ₹1 lakh growing to ₹3 lakh in 10 years is a CAGR of 11.61% a year.
What is real CAGR?
The CAGR left after inflation: (1 + CAGR) ÷ (1 + inflation) − 1. An 11.61% CAGR with 6% inflation is a real CAGR of 5.29%.
What is a good CAGR?
One that clearly beats inflation after tax. With inflation around 6%, a 7% CAGR barely grows your buying power; 10% to 12% over 10 years or more is a solid result for equity.
Is CAGR the same as average annual return?
No. A 50% gain followed by a 50% loss averages 0% a year, but you've lost money: the CAGR is −13.40%. CAGR is the rate that actually connects the start and end values.
What is the difference between CAGR and XIRR?
CAGR is for one amount invested once. XIRR handles money going in and out on different dates, like SIPs, so it's the right measure for a SIP's return.
How do I calculate CAGR in Excel?
Use =(final/initial)^(1/years)-1, or the built-in function =RRI(years, initial, final). Format the cell as a percentage.