How this calculation works
CAGR smooths the growth between two positive endpoints. It does not describe actual year-to-year performance and assumes no intermediate cash flows.
CAGR (%) = [(end ÷ start)^(1 ÷ years) − 1] × 100A worked example
Growing from ₹10,000 to ₹20,000 over 10 years gives approximately 7.177346% CAGR.
Good to know
Uses the stated formula and assumptions. Displayed decimal values are rounded; use consistent units for all inputs.
An average path is not the actual path
A value can jump up, fall and recover while ending at the same point as a smooth growth curve. CAGR replaces that journey with one constant annual rate that connects the starting and ending values.
A 50% gain followed by a 50% loss leaves 75% of the original amount. The simple average of those percentages is zero, but the compounded outcome is negative. Multiplication, rather than an arithmetic average, governs the growth of a balance.
Intermediate deposits change the question
If you add money during the period, part of the larger ending balance comes from your contributions. Treating that full increase as investment growth overstates the return. CAGR is not a cash-flow-aware performance measure.
Both endpoints must be positive for the real-valued growth-rate formula used here. The result also omits risk, taxes and costs not already reflected in the entered endpoints.
A few questions, answered
Does CAGR show annual volatility?
No. It smooths the endpoints into one rate and says nothing about fluctuations in between.
Can it be used with a negative starting value?
Not with this formula. The tool requires positive start and end values.