When planning your investment journey, understanding how your portfolio grows over time is critical. Whether you are evaluating your mutual fund performance or the returns from a recently listed IPO, the Compound Growth Rate Calculator becomes a key tool in estimating real growth and long-term potential.
Let’s break down how to use it effectively and why it matters.
A Compound Growth Rate Calculator helps investors understand how their investments grow over time when gains are reinvested. The most commonly used version of this is the Compound Annual Growth Rate (CAGR), which shows the average annual growth rate of an investment over a specific time period.
For example, if you invested ₹1 lakh in a stock three years ago and it is now worth ₹1.5 lakh, a CAGR calculator will help you figure out the average annual return.
Once an IPO is listed, its stock may experience significant volatility. Many investors jump in early, expecting short-term gains. But if you hold it for long-term growth, you need to measure its performance over time. That’s where the compound growth rate becomes essential.
If you bought shares during a listed IPO at ₹100 and today, two years later, the stock is trading at ₹140, the CAGR tells you whether this growth is better than other alternatives like fixed deposits, mutual funds, or ETFs.
Here’s the formula used in a compound growth rate calculator:
CAGR = [(Final Value / Initial Value) ^ (1 / No. of Years)] – 1
So, if your investment grew from ₹1,00,000 to ₹1,50,000 in 3 years:
CAGR = [(150000 / 100000) ^ (1/3)] – 1 = 14.47%
This tells you that your portfolio has grown at an average annual rate of 14.47% over the 3-year period.
To calculate your entire portfolio’s growth, you can use weighted averages or individual CAGR calculations for each asset and then blend them. A good online Compound Growth Rate Calculator will let you enter values for multiple assets and calculate total portfolio growth.
If you’ve invested in a listed IPO, equity mutual fund, or a direct equity stock, knowing your CAGR can help you:
- Compare returns with benchmark indices
- Evaluate whether it’s time to exit or hold
- Understand which assets contribute most to your portfolio’s growth
Tracking your portfolio’s performance is more than just checking daily prices. Use a Compound Growth Rate Calculator to get a clearer, more meaningful view of how your money is growing. Whether you’re evaluating a new listed IPO or your long-held SIPs, this tool is your best friend for long-term planning.
Want to simplify your analysis? Bookmark a reliable CAGR calculator and make it part of your regular investing routine.
