How to Calculate CAGR on Your SIP and Lumpsum Investments

What is CAGR?

Compound Annual Growth Rate (CAGR) is the steady yearly rate at which an investment would have grown from its starting value to its ending value, assuming gains are reinvested each year. It answers one question: "What constant annual return took me from where I started to where I ended?"

The CAGR formula

CAGR = (Ending Value ÷ Beginning Value)^(1 ÷ Number of years) − 1

Worked example (lumpsum): You invested ₹1,00,000 and it grew to ₹2,00,000 in 6 years.

CAGR = (2,00,000 ÷ 1,00,000)^(1÷6) − 1 = 2^0.1667 − 1 ≈ 12.2% per year.

You can run your own figures on our free CAGR calculator.

CAGR vs SIP — an important difference

CAGR is built for a single lumpsum. A SIP is many instalments made on different dates, so each instalment compounds for a different length of time. To measure a SIP's true return you should use XIRR (a money-weighted return), not a single CAGR figure.

If you only want the growth of your total SIP corpus between two dates, CAGR on the closing value still works as a rough guide — but for an accurate SIP return, use XIRR. To project a SIP's maturity value, use our SIP calculator.

What people mean by "monthly CAGR"

CAGR is annual by definition. To express it monthly, convert the annual rate:

Monthly equivalent = (1 + CAGR)^(1÷12) − 1

So a 12.2% annual CAGR is roughly a 0.96% monthly compounded rate — useful when comparing against monthly SIP returns.

Frequently asked questions

How do I calculate CAGR for a monthly SIP? Use XIRR for the true return; for a quick estimate, apply CAGR to the total invested vs the current value, then convert to monthly using the formula above.

Is a higher CAGR always better? Not on its own — always weigh it against the risk taken and the time period. A short period can flatter or distort CAGR.

Mutual fund investments are subject to market risks; read all scheme-related documents carefully. Past performance is not indicative of future returns.