Work backwards from what an investment was worth then and what it is worth now to find the annualised rate of return that connects the two.
CAGR = ((ending value ÷ beginning value)^(1 ÷ years) − 1) × 100. It expresses the single smoothed annual rate that would take the starting value to the ending value over the period, which makes investments held for different lengths of time directly comparable.
Absolute return is the total percentage gain regardless of time — 100% whether earned in two years or ten. CAGR annualises it, so 100% over two years is about 41% a year while 100% over ten is about 7%. Only CAGR allows a fair comparison across different holding periods.
Not accurately. CAGR assumes one investment at the start, but a SIP invests at many different points, each held for a different length of time. XIRR is the correct measure for SIPs and any other irregular cash flow.
No, and this is its main limitation. It smooths the entire journey into one number, so a steady 12% a year and a wild ride that happened to end at the same place produce an identical CAGR despite very different risk.
This calculator is for information only and is not investment, tax, or financial advice. Figures are estimates based on the assumptions you enter and are not a guarantee of future returns. Consult a SEBI-registered adviser or a qualified tax professional before acting.