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How to Calculate CAGR and ROI

6 min read · Updated September 26, 2026 · by Thomas M, Registered Investment Adviser (South Carolina)

How to Calculate CAGR and ROI – feature image

ROI tells you how much you gained in total; CAGR tells you the steady yearly rate that would produce it. Together they let you compare investments of different sizes and lengths.

ROI

ROI = (final value − total cost) ÷ total cost × 100. ₹1 lakh growing to ₹1.5 lakh is 50%.

CAGR

CAGR = (end ÷ start)1/years − 1. Doubling in 5 years is 14.87% a year. The same ₹1 lakh growing to ₹1.5 lakh in 3 years is 14.47% a year.

Future value and years

At 12% a year, ₹1 lakh becomes ₹3,10,584.82 in 10 years and takes 9.694 years (9 years 8 months) to triple.

Pitfalls

  • Average annual return is not CAGR.
  • Include costs in ROI.
  • For regular investments such as SIPs use an IRR-style measure.
  • Past growth is not a forecast.

Tools: CAGR and ROI calculators.

Practice questions

Test yourself, then tap to check. Answers are calculated by the tools linked below.

  1. An investment grew from ₹2.5 lakh to ₹6 lakh in 7 years. What is the CAGR?
    Show answer

    CAGR: 13.322%

  2. You bought a laptop for ₹60,000, spent ₹5,000 on upgrades and sold it for ₹50,000 after 2 years. What is the ROI?
    Show answer

    Return on investment (ROI): -23.08% · Net loss: ₹15,000.00 · Annualised ROI (CAGR): -12.29%

  3. ₹10,000 a month for 15 years at 12%. What is the maturity value?
    Show answer

    Maturity value: ₹50,45,760.00 · Estimated returns: ₹32,45,760.00

Frequently asked questions

What is the CAGR formula?

(Ending value ÷ starting value)^(1 ÷ years) − 1.

What is the difference between ROI and CAGR?

ROI is the total percentage gain; CAGR is the equivalent steady annual rate.

Can CAGR be negative?

Yes, if the ending value is below the starting value, though the calculator expects positive values.

Can I use CAGR for SIP returns?

Not directly; money is added over time.

Try it yourself

CAGR CalculatorFind the compound annual growth rate between two values, the future value at a given rate, or the years needed.ROI CalculatorWork out return on investment, net profit and the annualised return for any investment.SIP CalculatorEstimate the maturity value of a monthly SIP, the amount invested and the returns, with a year-by-year table.

Keep learning

How Compound Interest Works7 min readPercentage Increase and Decrease7 min readHow to Calculate SIP Returns6 min read

Reviewed by Thomas M, Registered Investment Adviser (South Carolina), who launched his own financial advisory firm in 2010. Spot a mistake? Tell us. See our editorial policy. Finance content is educational and not financial advice; see the disclaimer.