A CAGR (Compound Annual Growth Rate) Calculator is a valuable tool for investors and businesses to measure the growth rate of an investment or a financial metric over a specified period. Whether you're evaluating the performance of a stock, mutual fund, or business revenue, the CAGR calculator helps you understand the consistent rate of growth, even if the actual gains fluctuate from year to year.
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Investment Plans
Generate wealthEarn 1 Cr# in maturity with Zero LTCG tax¶
Double tax savings^On premiums (under 80C) and on maturity (under
10(10D))
CAGR, or Compound Annual Growth Rate, is a measure of how much your investments have grown over a period of time. It calculates the average annual return on your investments, assuming that any profits are reinvested each year. This makes CAGR a useful tool for investors to track their investment performance. While it's a representative number and not an exact return, CAGR is widely used to compare different investments.
To calculate CAGR, you can use a CAGR calculator, which uses the CAGR formula. This formula helps you determine the rate of return on your investment, such as a mutual fund. By comparing your CAGR to a benchmark return, you can assess how well your investment has performed.
What is the CAGR Calculator?
The CAGR Return Calculator is a tool that helps you calculate the Compound Annual Growth Rate (CAGR) of an investment. It simplifies the process of calculating CAGR by automatically applying the CAGR formula, which involves the starting value, ending value, and time period. This can be helpful for comparing different investment options, tracking the performance of your portfolio, or making informed financial decisions.
Power of Compounding Calculator
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Interest rate
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Sensex has given 10% return from 2010-2020
How Does the CAGR Work?
CAGR works by calculating the average annual growth rate of an investment over a specific period. It assumes that any profits earned during the period are reinvested, compounding the growth.
Below is the CAGR formula:
CAGR = (Ending Value / Starting Value)^(1 / Number of Years) - 1
Where:
Ending Value: The final value of the investment.
Starting Value: The initial value of the investment.
Number of Years: The length of the investment period.
For example: if you invest ₹10,000 and it grows to ₹20,000 over 5 years, the CAGR would be:
CAGR = (20,000 / 10,000)^(1 / 5) - 1 = 14.87%
This means your investment grew at an average annual rate of 14.87% over the 5-year period.
Benefits Of CAGR Calculator Online
Below are the benefits of the compound annual growth rate calculator:
Speed and Accuracy: The compound annual growth rate calculator can perform complex calculations instantly and accurately, eliminating the risk of human errors.
Flexibility: Many CAGR calculators online allow you to input various data points, such as starting value, ending value, and time period, providing flexibility in your calculations.
Accessibility: The CAGR return calculator is free to use and can be accessed from anywhere with an internet connection.
Understanding Investment Performance: By calculating CAGR, you can gain a better understanding of how your investments have performed over time. This can help you identify successful strategies and areas for improvement.
Comparing Different Investments: CAGR provides a standardized measure of return, making it easier to compare the performance of different investments, such as stocks, bonds, or mutual funds.
Setting Realistic Goals: CAGR return calculator can help you set realistic financial goals by providing a benchmark for expected returns. For example, if you want to double your investment in 10 years, you can calculate the required CAGR to achieve this goal.
Conclusion
The CAGR Calculator offers a clear and reliable way to determine the performance of an investment over time by incorporating the power of compounding. It helps investors and businesses make informed decisions by providing a consistent growth rate, regardless of year-to-year volatility. By using a CAGR calculator online, you can easily compare the growth potential of different investments and plan your financial strategies precisely.
FAQs
How can CAGR be converted to annual growth?
CAGR represents the average annual growth rate of an investment or loan, accounting for compounding over time. It smooths out fluctuations and provides a clearer picture of how your investment grows. It's calculated as the ratio of the final value to the initial value over a set period.
What is considered a good CAGR percentage?
There isn't a specific percentage that defines a "good" CAGR, especially for equity investments. The ideal rate depends on various factors. However, in general, a strong CAGR should exceed the interest rate offered by savings accounts, whether it's in equities or fixed-income investments.
Can CAGR be calculated for months?
Yes, CAGR can be adapted for monthly growth as well. This is called CMGR (Compound Monthly Growth Rate), which works similarly to CAGR but measures average monthly growth. The formula remains the same; just substitute years with months.
†Policybazaar does not endorse, rate or recommend any particular insurer or insurance product offered by any insurer. This list of plans listed here comprise of insurance products offered by all the insurance partners of Policybazaar. The sorting is based on past 10 years’ fund performance (Fund Data Source: Value Research). For a complete list of insurers in India refer to the Insurance Regulatory and Development Authority of India website, www.irdai.gov.in
Past 10 Years' annualised returns as on 01-11-2024
^The tax benefits under Section 80C allow a deduction of up to ₹1.5 lakhs from the taxable income per year and 10(10D) tax benefits are for investments made up to ₹2.5 Lakhs/ year for policies bought after 1 Feb 2021. Tax benefits and savings are subject to changes in tax laws.
*All savings are provided by the insurer as per the IRDAI approved insurance plan.
Tax benefit is subject to changes in tax laws. Standard T&C Apply
~Source - Google Review Rating available on:- http://bit.ly/3J20bXZ
^^The information relating to mutual funds presented in this article is for educational purpose only and is not meant for sale. Investment is subject to market risks and the risk is borne by the investor. Please consult your financial advisor before planning your investments.
#The investment risk in the portfolio is borne by the policyholder. Life insurance is available in this product. The maturity amount of Rs 1 Cr. is for a 30 year old healthy individual investing Rs 10,000/- per month for 30 years, with assumed rates of returns @ 8% p.a. that is not guaranteed and is not the upper or lower limits as the value of your policy depends on a number of factors including future investment performance. In Unit Linked Insurance Plans, the investment risk in the investment portfolio is borne by the policyholder and the returns are not guaranteed. Maturity Value: ₹1,05,02,174 @ CARG 8%; ₹50,45,591 @ CAGR 4%
¶Long-term capital gains (LTCG) tax (12.5%) is exempted on annual premiums up to 2.5 lacs.
**Returns are based on past 10 years’ fund performance data (Fund Data Source: Value Research).
Generate wealth Earn 1 Cr# in maturity with Zero LTCG tax¶
Double tax savings^ On premiums (under 80C) and on maturity (under 10(10D))
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