CAGR ↔ Annual Return Converter
Convert a CAGR into a year-by-year growth table — or calculate the CAGR implied by a series of annual returns. Understand what a compound rate really means for your wealth.
Year-by-year portfolio value
CAGR vs Simple Average Return — A Critical Difference
If a fund returns +50% in year 1 and −33% in year 2, the simple average is 8.5%. But the actual CAGR is 0% — you ended up exactly where you started (₹1L → ₹1.5L → ₹1L). This is the “volatility drag” — the larger the swings, the more the CAGR underperforms the simple average. It’s why consistent 12% returns beat alternating 20% and 4% returns over time.
Year-by-year with CAGR r:
Year n Value = Initial × (1 + r)^n
Volatility Drag = Simple Average − CAGR
≈ Variance / 2 (for small variances)
Initial ₹1,00,000 → Final value: ₹1L × (1.164)^10 = ₹4,61,900
That’s a 4.6× wealth multiple — or ₹3.62L in gains on ₹1L invested.
💡 What This Means for You
When comparing funds, always use CAGR for multi-year periods. A fund showing “average annual return of 18%” might have a CAGR of just 13–14% due to volatile years. Lower volatility = less volatility drag = higher actual CAGR for the same average return.
Calculate real CAGR from buy/sell dates
Use the CAGR Calculator to compute annualised returns precisely from investment dates.