# How to calculate Compound Annual Growth Rate

When investing or saving (Yes, they are different), it is often useful to calculate your returns to measure how your investments (or savings) are doing. This can be easily done by calculating CAGR or the Compound Annual Growth Rate (CAGR) of your investments.

 Always calculate the real growth rate of your investments

### What is CAGR

Investopedia defines CAGR as –

“CAGR isn’t the actual return in reality. It’s an imaginary number that describes the rate at which an investment would have grown if it grew at a steady rate. You can think of CAGR as a way to smooth out the returns.”

### Formula for calculating CAGR

A simple formula for calculating CAGR is,

 Click on image to go to the CAGR Tool

In case you have any problems downloading the calculator, just leave a comment below (with email) and we will mail it to you. The instructions for using the calculator are given in the sheet itself.

Hope you find it useful.

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#### Written by Dev Ashish

Founder - Stable Investor Investing | Personal Finance | Financial Planning | Common Sense

1. Asp says:

just a quick question..where do you find the P/BV ratio of a particular script…tried googling but no luck. Keep up the good work..I like reading your site..

2. @8eed52d84c1c844aa6be255d2db4222a:disqus

Book Value per share can be found from company's quarterly/annual reports. This BV can then be used for calculating P/BV on a daily basis.

3. Asp says:

Thanks,

4. No. of years corresponds to the period over which the data has been taken or the actual no. of years?? For eg if we are taking 2003-08…no. of years will be 5 or 6??

In the case of 2003-08, no. of years would be 5 (Assuming the exact period to be January 1, 2003 to December 31, 2008)

6. If u assume Jan1 2003 to 31st Dec 2008… it should come out to 6 years..isn't it?

7. Saurabh says:

Hey!

Can you also provide a CAGR formula for monthly payments which culminate into a bulk yield at the end of x years.

E.g.: If I pay 3k per month for 15 years and the maturity value is 15 lacs, what is the effective CAGR of this investment?

8. @b4782d5c5a743d32ab4839b96422cbd3:disqus

You can calculate the effective CAGR of your investments using XIRR function in MS Excel.