# CAGR Calculator

• Initial Value

• Final Value Costs

• Duration of Investment

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### Expected returns for your investments

CAGR
70%
• Initial Value

• Final Value

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## What is a CAGR calculator?

CAGR stands for Compound Annual Growth Rate. It is used to measure the average yearly growth of an investment over a time period and depicts the average rate of returns earned from investments over a year.

Investors can use the m.Stock CAGR calculator to calculate the growth or decline of their investment. It is simple, error-free, and easy to use.

## Why to use a CAGR calculator?

You don’t need to remember the CAGR formula or do complex calculations to find the CAGR of an investment. Simply use the m.Stock Compound Annual Growth Rate calculator. The m.Stock CAGR calculator online is extremely easy to use and completely free.

• Evaluate the investment options based on the CAGR and decide whether you should shift your investment from one stock to another.
• Check the relative growth of the business or organisation in comparison to the market leaders.

However, you have to keep in mind that a CAGR calculator will not indicate the investment risk.

## How to calculate CAGR?

The CAGR is calculated using the CAGR formula, which gives the compounded annual growth rate on investment. The Compound Annual Growth Rate formula is as follows:

Where FV represents the investment’s Future Value, PV represents the Present Value, and n is the period in years.

It calculates the real-time CAGR for any business or organisation for investors.

CAGR = [(FV / PV) ^(1 / n)] – 1
##### Invested ₹25,000

in a mutual fund in 2022.

=

Investment will be worth

##### ₹25,000 in 2027.

Let us take an example to understand this better. Suppose you invested Rs. 25,000 in a mutual fund in 2022. The investment will be worth Rs. 45,000 in 2027.

When the CAGR formula is applied, the CAGR of this mutual fund investment is:

Thus, the CAGR percentage will be 12.47%.

Here, the results mean the mutual fund investment gave you an average return of 12.47% per annum.

CAGR
= [(45000/ 25000) ^ (1/5)] – 1
= 0.1247%

## Using the m.Stock CAGR Calculator

The m.Stock CAGR calculator is extremely simple and easy to use. To use the m.Stock CAGR calculator, follow the 3 steps mentioned below.

• 1 Enter the total amount you invested.
• 2 Enter the expected value of the investment at the end of the maturity period.
• 3 Enter the period of investment in years. Now, click on "Calculate".

The CAGR calculator will show the results based on the information you provided. It will depict the total returns you have earned from the investment along with CAGR or absolute returns. Along with that, you can see a graphical representation of the growth of investment over time. Also, it will have a short list of Mutual Funds with similar growth potential.

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## FAQs on CAGR Calculator

CAGR provides the average yearly growth of the investments over a period. CAGR returns depict the average rate of returns earned from investments over a year.

The CAGR is calculated using the CAGR formula, which gives the compounded annual growth rate on investment. The mathematical Compound Annual Growth Rate formula is

CAGR = [(FV / PV) ^ (1 / n)] – 1

Where FV represents the investment’s Future Value, PV represents the Present Value, and n is the period in years.

No, the CAGR does not indicate investment risks.

Yes, the m.Stock CAGR calculator is completely free to use. You can use it as many times as you want.

A CAGR (Compound Annual Growth Rate) calculator helps you measure the annual growth rate of an investment over a specified period, accounting for compounding. Its advantages include simplicity, ease of use, and providing a clear, annualised growth rate, which makes it easier to compare different investments. By using a CAGR calculator, you can make more informed decisions and better understand the long-term growth potential of your investments.

There is no universal benchmark or threshold for CAGR as it varies across industries and individual investment goals. However, a higher CAGR generally indicates better investment performance. Comparing the CAGR of an investment to industry averages or historical performance can provide valuable insights. It's important to consider the context and time frame when evaluating CAGR, as different sectors and markets can have varying growth rates.

You can calculate CAGR online using various financial websites and investment platforms, like m.Stock, that offer CAGR calculators. To use these calculators, you typically need to input the initial value of the investment, the current or final value, and the duration of the investment period. The calculator then computes the CAGR, giving you an annualised growth rate. These online tools make it easy to quickly and accurately assess the growth rate of your investments, and make informed investment decisions.

To use the m.Stock CAGR calculator, follow these four simple steps:

• Enter the initial value of your investment.
• Input the final expected value of the investment.
• Specify the number of years over which the investment has grown, or the anticipated duration of the investment.
• Click on the 'Calculate' button to get the CAGR immediately.

The calculator will display the compound annual growth rate, providing you with a clear picture of the investment's growth over time. This helps in comparing different investments and making informed decisions.

A good Compound Annual Growth Rate (CAGR) percentage varies depending on the industry, investment type, and market conditions. Generally, a CAGR of 8-12% is considered good for equity investments, while higher rates may be expected in high-growth sectors. It's important to compare the CAGR against industry averages and the investor’s specific financial goals. A consistently high CAGR indicates strong performance, but always consider the risk factors associated with higher growth rates.

While the CAGR calculator is a useful tool for measuring investment growth, it has some limitations. It assumes a constant growth rate, which may not reflect market volatility and fluctuations. The calculator does not account for the impact of fees, taxes, or changes in investment strategy. Additionally, it does not provide insights into the reasons behind growth or decline. Therefore, it should be used in conjunction with other financial analysis tools for comprehensive investment evaluation.

Yes, you can use CAGR for periods shorter than a year by adjusting the formula to account for the fractional year. This involves dividing the number of months by 12 to convert the period into years. For example, for a six-month period, you would use 0.5 as the time period in the CAGR formula. This allows you to measure the growth rate for any specific period, providing flexibility in evaluating short-term investments.

A promising CAGR for a company varies by industry and market conditions but generally indicates robust growth and strong performance. For many companies, a CAGR of 10-20% over several years is considered promising, signalling effective management and market competitiveness. It's essential to compare a company's CAGR to industry peers and historical performance to assess its growth potential accurately. A high CAGR should also be evaluated alongside other financial metrics to ensure sustainable growth.

The 5-year CAGR refers to the compound annual growth rate of an investment or company's revenue, profits, or other financial metrics over a five-year period. It provides an annualised growth rate that smoothens out year-to-year fluctuations, offering a clearer picture of long-term performance. This metric helps investors and analysts assess the effectiveness of a company’s growth strategy and compare it with peers and market benchmarks over a significant period.

Calculating CAGR is simpler and provides a clear, annualised growth rate, making it easy to compare different investments. However, IRR (Internal Rate of Return) is more comprehensive, considering the timing and size of cash flows, which makes it suitable for more complex investment scenarios. While CAGR is ideal for straightforward growth assessment, IRR is better for evaluating investments with varying cash flows. The choice depends on the complexity of the investment and the level of detail required.

The CAGR ratio is a metric used to compare the compound annual growth rates of two different periods or entities. It helps in assessing relative growth performance over time. For example, comparing the CAGR of a company's revenue to its industry average can provide insights into its competitive standing. The ratio provides a straightforward way to evaluate and compare growth rates, making it a useful tool for investors and analysts.

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