Measure the annualized growth rate of an investment or trading strategy over a specific period to benchmark against NIFTY 50.
📅
CAGR Calculator
Measure the annualised growth rate of any investment or strategy and benchmark it against NIFTY 50.
₹
₹
%
₹
years
—
Your CAGR
—
Absolute Return (%)
—
Total Profit (₹)
CAGR Benchmark Comparison
₹1 lakh over 3 years at each rate
Why CAGR Is the Right Return Metric
Simple return (80% over 3 years) is misleading — it ignores timing. CAGR smooths this into an equivalent annual rate that allows fair comparison across any time period.
CAGR = (Final Value ÷ Initial Value)^(1 ÷ Years) − 1
e.g. ₹1L → ₹1.8L in 3 years = (1.8)^(1/3) − 1 = 21.6% CAGR
NIFTY 50 benchmark CAGRs: 10-year historical ~13%, 5-year ~15%, 3-year varies widely. Any strategy not beating NIFTY 50 CAGR on a risk-adjusted basis should be replaced with a simple index fund.
About This Calculator
The CAGR Calculator measures the Compound Annual Growth Rate of any investment or trading strategy — the single most useful number for evaluating long-term performance. CAGR smooths out year-to-year volatility and expresses returns as a consistent annual percentage, allowing fair comparison between investments held for different periods.
For NSE traders, CAGR is the standard metric used to benchmark strategy performance against the NIFTY 50 index, Fixed Deposits, and other alternatives. Any active trading strategy that does not generate CAGR higher than NIFTY 50's historical 12–14% is mathematically inferior to simply buying a NIFTY 50 index fund — which requires zero time, zero expertise, and zero transaction costs.
The Momentum IQ backtesting engine reports CAGR for every strategy, making it easy to compare strategies and benchmark against market returns. Always evaluate backtested strategies on CAGR over at least 3 years of data to account for different market cycles (bull market, bear market, and sideways consolidation).
Formula
CAGR = (Final Value ÷ Initial Value)^(1 ÷ Years) − 1
Expressed as percentage: CAGR × 100
Total Return = (Final ÷ Initial − 1) × 100
CAGR from % return: CAGR = (1 + Total Return%)^(1÷Years) − 1
Worked Example
A trader's portfolio grew from ₹5,00,000 to ₹9,35,000 over 4 years:
CAGR = (9,35,000 ÷ 5,00,000)^(1÷4) − 1
= (1.87)^0.25 − 1
= 1.1685 − 1
= 16.85% CAGR
Comparison:
NIFTY 50 same period: ~14% CAGR
Fixed Deposit: 7% CAGR
This trader outperformed the market by ~3% annually — generating alpha.
Frequently Asked Questions
NIFTY 50 has delivered approximately 12–14% CAGR over the last 20 years (2004–2024), including bull markets, the 2008 crash, COVID crash, and multiple corrections. The 10-year rolling CAGR rarely drops below 8% for long-term investors. This is the benchmark every NSE trader must beat to justify active trading.
Simple return ignores timing and cannot be compared across different periods. If one fund returned 60% in 3 years and another returned 40% in 2 years, simple return comparison is misleading. CAGR converts both to annual rates: 60% over 3 years = 17.2% CAGR, 40% over 2 years = 18.3% CAGR. The second fund actually performed better annually.
Target a minimum CAGR of 15–20% to meaningfully beat NIFTY 50 after transaction costs and taxes. A CAGR of 20–30% is excellent for an active strategy. Be skeptical of backtests showing CAGR above 40% — these usually indicate overfitting or survivorship bias. Live trading performance is typically 30–50% lower than backtested CAGR.
No — CAGR measures return only, not risk. Two strategies can have the same CAGR but very different drawdown profiles. Always evaluate CAGR alongside Maximum Drawdown, Sharpe Ratio, and Calmar Ratio (CAGR ÷ Max Drawdown). A strategy with 20% CAGR and 10% max drawdown is far superior to one with 20% CAGR and 40% max drawdown.
Backtest strategies on real NSE data
Apply your calculated position size to any of 443 pre-built NSE strategies.
MomentumIQ is an educational platform for strategy research and backtesting. We do not provide investment advice, recommendations, or tips. All backtest results are hypothetical, based on historical data, and for educational purposes only. Past performance is not indicative of future results. Backtested results may not account for brokerage, slippage, taxes, or other real-world costs. Please consult a SEBI-registered investment advisor before making any investment decisions.
