CAGR (Compound Annual Growth Rate) measures the mean annual growth rate of an investment over a period longer than one year. It represents the rate at which an investment would have grown if it grew at a steady rate annually. Formula: CAGR = (Maturity Value / Invested Amount)^(1/Years) - 1.

What is the difference between CAGR and absolute return?

Absolute return is the total percentage gain or loss on an investment without considering the time period. CAGR normalises this over years, making it suitable for comparing investments of different durations. For example, 50% absolute return over 5 years is approximately 8.45% CAGR.

What is a good rate of return on investment in India?

Benchmark returns in India: FD returns 6.5-9%, PPF returns ~7.1%, Nifty 50 index funds average ~12% CAGR over 20 years, real estate varies widely. A CAGR above inflation (currently ~5-6%) is the minimum threshold for real wealth creation.

Free Rate of Return Calculator – CAGR & Investment Returns

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Year-wise Growth

Year	Amount Invested (₹)	Value (₹)	Gain / Loss (₹)

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About TrufinOps Rate of Return Calculator

The TrufinOps Rate of Return Calculator helps Indian investors measure how well their investments are performing. Whether it's a lumpsum investment, a mutual fund, FD, real estate, or SIP — this tool calculates CAGR, absolute return, and SIP rate of return instantly. All calculations run locally in your browser.

What Is CAGR?

CAGR (Compound Annual Growth Rate) is the most reliable metric for comparing investment performance across different time periods. It shows the steady annual growth rate that would have taken your investment from its beginning value to its ending value. Unlike absolute return, CAGR accounts for the time dimension of investment.

CAGR Formula: CAGR = (Ending Value / Beginning Value)^1/Years − 1

Absolute Return vs CAGR

Absolute return is simply the percentage gain or loss: (Final − Initial) / Initial × 100. It doesn't account for time. A 100% absolute return sounds great, but if it took 20 years, the CAGR is only ~3.5% — barely ahead of inflation. Always compare investments using CAGR for a fair, time-adjusted view.

What Is a Good CAGR in India?

Inflation benchmark: 5–6% CAGR (minimum to preserve purchasing power)
Fixed Deposit / Debt: 6.5–9% CAGR
PPF: ~7.1% CAGR (tax-free)
Nifty 50 Index (20-year avg): ~12% CAGR
Top-performing equity mutual funds: 13–18% CAGR
Real estate (tier-1 cities, 10-year): 8–12% CAGR

How to Calculate SIP Rate of Return

For SIP investments, the standard CAGR formula doesn't work because you're investing money at multiple points. The correct metric is XIRR (Extended Internal Rate of Return). Our SIP RoR calculator approximates XIRR using binary search to find the rate that makes the SIP future value equal to your actual maturity value.

Example: CAGR Calculation

Invested: ₹1,00,000 in January 2021
Current Value: ₹1,80,000 in January 2026
Period: 5 years
CAGR = (1,80,000 / 1,00,000)^1/5 − 1 = 12.47% p.a.
Absolute Return = 80%

Frequently Asked Questions

Why is CAGR better than absolute return for comparison?

Absolute return doesn't account for how long the investment was held. CAGR normalises performance on a per-year basis, making it possible to compare a 5-year investment with a 10-year investment fairly.

Can CAGR be negative?

Yes. If your final value is less than the invested amount, the CAGR will be negative, indicating a loss per year on a compounded basis.

How is XIRR different from CAGR for SIPs?

XIRR (Extended Internal Rate of Return) considers the timing of each individual cash flow (each SIP instalment), making it more accurate for periodic investments. CAGR only works accurately for single lumpsum investments. Our SIP mode approximates XIRR using binary search.

Disclaimer

This calculator provides estimates based on the inputs provided. Past returns do not guarantee future performance. Investments are subject to market risk. This tool is for informational purposes only and does not constitute investment advice. Please consult a SEBI-registered advisor before making investment decisions.