Initial Value Amount
Trade More. Pay Less.
₹0 on Stock Investments & Flat ₹20 on Intraday & F&O
Hey, want to multiply your money?
Make a lumpsum investment in the market today and benefit from compounding power.
What is Compounding?
What is CAGR?
Difference Between CAGR Vs Absolute Returns
Absolute value is the overall gain that an investment has made over time. Calculating absolute return is pretty simple. The absolute return formula is as follows:
Absolute Returns (%) = [(Current Value / Initial Investment Value) – 1] * 100
For instance, if you initially invest ₹1,00,000, which grows to ₹1,79,000, then
Absolute Returns = [(1,79,000 / 1,00,000) – 1] * 100
Absolute Returns = 79%
In this case, the investment has returned 79%, but we are unclear about how long it took to generate such high returns.
To elaborate, if you were given the option to either invest in Fund A, which has grown by 12% or Fund B, which has grown by 8%, would fund A necessarily be a good choice under all circumstances? It will actually depend on how long it took to generate such returns—something that a CAGR calculation can help clarify.
This is because CAGR would consider the growth experienced per year, instead of different number of years.
What is a CAGR Calculator?
As an investor, you have to make smart decisions about your money. A CAGR calculator can help you achieve that goal. The CAGR calculator is a free calculation tool available online on the Angel One website.
Using the CAGR calculator, you can:
- Calculate the CAGR of any investment, provided you already know the initial value, the current value, and the duration of the investment.
- Know the CAGR, which will help you determine how fast and efficiently your investments are growing with time.
- Knowing the rate of growth helps you evaluate which investment options are performing better compared to others.
How Does the CAGR Calculator Work?
How Can a CAGR Calculator Help You?
How to Calculate CAGR?
The following is the CAGR formula that is used to calculate the CAGR of an investment or any other metric that can grow over the years:
CAGR = [(End Value/Start Value)^(1/n) – 1]*100
n = Number of years
Suppose you bought some shares of a company at the beginning of 2018 at ₹10,000, held it for 5 years, and the current value of those shares in 2023, i.e. after 5 years, is ₹15,000. In that case,
Start Value = ₹10,000 n = 5 End Value = ₹15,000 CAGR = [15,000/10,000]^(⅕) -1 = 0.845 So the CAGR on your investment after 5 years would be 0.845 or 8.45 %.
How to Use Angel One CAGR Calculator?
In order to use the Angel One CAGR calculator, you simply have to enter the following values into the calculator:
- Initial investment - Enter the amount of money you had invested.
- Final value cost - Enter the current value of the investment(s) whose CAGR you are measuring.
- Duration of investment - Enter the number of years for which the investment was held.
After inputting these values, the calculator instantaneously gives you the CAGR for the investments for that specific period of time using the above formula.
If we take the above example of buying shares, then you simply have to take the following steps to find out the CAGR of the investment:
- Enter the Initial Investment as ₹10,000.
- Enter the Final Value Cost as ₹15,000.
- Enter the Duration of Investment as 5
The CAGR calculator will automatically show you that the CAGR of that particular investment is 8.45 %.
Advantages of CAGR Calculator
The following are some of the advantages of a CAGR calculator:
- Instant calculation - Once you enter the values in the required fields, the CAGR calculator immediately provides you with the CAGR value in percentage form.
- Easy calculation and comparison - Using the CAGR calculator, you can easily find out the CAGR of multiple investments in a matter of minutes. Thereafter you can compare them based on the CAGR and find out which investment gives you the highest annual returns.
- Free access - The CAGR calculator on the Angel One website is completely free of charge, regardless of how many times you use it.
- Convenient - You can easily access the CAGR calculator from anywhere using a device with internet access.
CAGR depicts average growth rate over the years on an investment or loan when it is compounding. It smooths out fluctuations and let you get an idea of how your money will perform during the tenure. It is a ratio of the final value and the beginning value of the investment, calculated over a period. Average Annual Growth Rate is a linear averaging formula and doesn’t take into account the effects of compounding.