CAGR Calculator

https://www.shriramfinance.in/cagr-calculator

Initial Value

Final Value Cost

Duration of Investments (Years)

CAGR

82.06%

Final Value

Initial Value

By calculating the compound annual growth rate of the investment, you can find out if it has given good returns. This will let you calculate the growth of shares, mutual funds, debentures, and any other investments. All you need to know is the starting value of the investment and its growth after a certain period.

CAGR makes it easier to understand how much an investment has grown over a certain period. Using the compound annual growth formula, you can find the historical CAGR using past data or make future projections. For example, if you invested money in a stock five years ago, you can calculate how much your investment has grown over time or how much it will grow in the future.

What is CAGR?

CAGR, short for Compound Annual Growth Rate, is a financial metric that represents the annual growth rate of an investment over a specific period, assuming that the investment has grown or declined every year.

It is calculated using the CAGR formula based on the principles of compounding. The formula assumes that the profits get reinvested each year, and this pattern continues throughout the investment. CAGR is a compounded proportion between the starting value and the future value of the investment.

You can calculate CAGR returns using the CAGR calculator.

What is a CAGR calculator?

Compound Annual Growth Rate Calculator is an online tool that helps investors calculate the growth rate of their investments. Using the CAGR calculation formula to calculate this growth rate manually can be difficult. It requires a lot of mathematical calculations and poses the risk of human error. But a CAGR growth calculator can provide accurate results within a few seconds.

An annual growth rate calculator finds out the CAGR of any investment based on its initial value, final value, and duration. You can use a CAGR calculator to calculate returns on stocks, mutual funds, and other investments.

How do CAGR calculators work?

A compound growth rate calculator is designed to automate the calculation of CAGR. This tool uses the same formula mentioned above to provide results instantly. It requires the user to enter details like the present value of the investment, the likely future value of the investment, and the duration. Using a compounding growth calculator can help you in many ways. You can use the monthly CAGR calculator for calculating monthly returns as well.

How do I calculate CAGR?

CAGR can be calculated using the compound annual growth formula instead of a calculator. Understanding the formula for calculating CAGR is essential to grasp its concept and how it quantifies growth.

1. CAGR

Here's the formula for CAGR.

CAGR = (FV / PV) ^ (1/n) -1

In the formula,

FV = Future value of the investment

PV= Present value of the investment

n= Duration of investment (in years)

Let's understand the CAGR formula with an example.

Suppose you purchased a mutual fund XYZ in 2023 at a cost of ₹1,00,000. The future value of the fund is likely to be ₹3,25,000 after 5 years in 2028.

If you put these figures in the compound growth rate formula, you will find that the CAGR for the mutual fund is 26.58%.

2. Absolute Returns

One can also calculate absolute returns on investment using a slightly modified version of the formula for CAGR.

Absolute Returns = (FV-PV)/PV*100

In the modified compound growth rate formula,

FV= Future value of the investment

PV= Present value of the investment.

Using the same CAGR formula example discussed above, the absolute returns on mutual fund XYZ are 225%.

You can calculate these rates for multiple investments and compare them to choose the best option. Instead of using the CAGR calculation formula every time, you can use an annual growth rate calculator to get these results faster. This tool uses the same compound annual growth rate formula discussed here.

How can a CAGR calculator help you?

CAGR calculators offer numerous advantages to investors, such as:

Easy Comparison

Investors can use CAGR values to compare the historical performance of various investments. This helps them make data-driven investment decisions.

Long-term planning and risk assessment

CAGR enables an investor to evaluate the potential returns from long-term investments. Investors can assess the growth and risks of various investments, which helps in goal setting and financial planning.

Projected Growth

CAGR return calculators can be used to project the future growth of various investments. Investors can assess risks by analyzing the CAGR values provided by the calculators. This aids investors in diversifying their investment portfolios.

How to use the Shriram Finance CAGR calculator?

Using a compound annual growth rate calculator is easy. Follow these simple steps to use the Shriram Finance CAGR calculator online.

Step 1: Visit the official Shriram Finance website and locate the CAGR calculator.

Step 2: Enter the present value, future value, and duration of your investment in the respective blank fields.

Step 3: Click on 'Submit'.

The CAGR final value calculator will show you the CAGR of the investment within just a few seconds.

Benefits of CAGR Calculators Online

Convenience

CAGR can be calculated manually using the CAGR formula, but the calculation can be time-consuming. CAGR growth calculators can perform these calculations much faster, providing the answers in just a few seconds.

Accuracy

Investors can make calculation errors while using the compound annual growth rate formula. However, if you are using a CAGR calculator, accuracy is guaranteed. However, you must ensure you put the correct figures in the proper fields.

Enables comparison of investments

The CAGR growth calculator helps investors compare two or more investments. You can use it to estimate the rate of return on mutual funds. You may be able to use CAGR calculators for stocks as well.

Open an Account CAGR Calculator

Use the CAGR calculator any time you want by opening an account. All you have to do is fill out a simple registration form to get started. Open an account with Shriram Finance today!

Conclusion

CAGR helps in determining the profit potential of a company. This rate, in turn, helps you estimate the growth of its shares, debentures, mutual funds, and other instruments. By using a CAGR calculator online, you don't have to spend time and effort performing complex mathematical calculations. All you have to do is enter your investment details, and the calculator will provide an accurate CAGR in a matter of seconds.

This calculator can also help in comparing different investment options and identifying the right instruments to invest in, making it a highly helpful tool for investors.

Frequently Asked Questions (FAQs)

How do you convert CAGR to annual growth?

CAGR shows the average growth rate of an investment over a specific period. Annual growth can be calculated by dividing the difference between future and present values by the present value and converting it to a percentage.

What is a good CAGR percentage?

There is no standard CAGR percentage. However, ideally, it should be higher than the interest offered on savings accounts by banks.

Why is CAGR important?

CAGR is a better measure than absolute growth because it is based on compounding. It also enables you to compare various types of investments, such as stocks and mutual funds.

What does a 5-year CAGR mean?

A 5-year CAGR indicates the average annual rate at which an investment has grown over 5 years.

Can you use CAGR for months?

Yes, you can calculate the monthly CAGR using the formula we used above-

CAGR = (FV / PV) ^ (1/n) -1

Replace the "n" in the formula with several months instead of several years to get a CAGR for months.

How do I calculate the CAGR of a company?

You can calculate the CAGR of a company using the value of the company's stock initially and the value of the same stock after a while.

What is a promising CAGR for a company?

CAGR is evaluated on the basis of multiple factors, like the size of the company and the nature of the business. For large companies, a CAGR between 5% and 12% is considered promising. For small businesses, it should be between 15% and 30%.

Why is CAGR better than average?

A CAGR is better than average because it considers compounding throughout the investment.

What is the difference between XIRR and CAGR?

XIRR calculates the average rate of return for each cash flow you invest, and CAGR calculates the growth rate for the whole investment. XIRR is better suited for investments like SIPs, where you invest at different times.