How to use this Why CAGR is the only metric that matters calculator
If you buy Real Estate for ₹50 Lakhs and sell it 10 years later for ₹1 Crore, your broker will scream that you made a '100% Return!'. While the Absolute ROI is indeed 100%, your money sat trapped for a decade. The CAGR (wealth generated per year) was only 7.17%. Since Indian inflation often averages 6-7%, you realistically generated almost zero true wealth.
Key Calculation Assumptions
- Calculations assume fixed compounding frequencies unless custom compounding is selected.
- Results do not factor in unannounced statutory tax rate adjustments or customized bank penalty fees.
- Calculations serve educational decision-making and planning purposes.
Frequently Asked Questions (FAQs)
What is Absolute ROI?
Return on Investment (ROI) is flat. It simply divides your total profit by your total initial investment. It does NOT care whether it took you 2 weeks or 20 years to make that profit.
What is Compound Annual Growth Rate (CAGR)?
CAGR represents the precise, steady annual return required to grow an investment from its initial to final value, assuming profits are smoothly compounded at the end of each year. It factors in Time.
How do I use Compare Mode?
If you have a Fixed Deposit that returned ₹20,000 profit in 1 year, and a Mutual Fund that returned ₹100,000 profit in 6 years, which is better? Enter both into the Compare Engine to strip out the time variance and pit their CAGRs face-to-face.