LIC CAGR Calculator
Evaluate the geometric annualised growth rate of any financial investment or asset value sequence over time.
14.87%
Annualised geometric growth rate.
• CAGR represents the smoothed annual rate at which an investment grows as if it had compounded at a steady rate.
• It does not account for interim volatility or individual cash flow schedules.
Understanding CAGR
Compound Annual Growth Rate (CAGR) is the annualised rate of geometric growth required for an investment to grow from its beginning balance to its ending balance, assuming compounding.
- CAGR Formula: CAGR = ((Ending Value / Beginning Value) ^ (1 / t)) - 1
- Smoothed Metric: Represents a hypothetical steady growth rate, smoothing out interim volatility.
Why Use CAGR?
CAGR is particularly useful for comparing performance across diverse assets (such as real estate, bonds, and equities) over identical horizons while ignoring yearly fluctuations.
Frequently Asked Questions (FAQ)
Does CAGR account for periodic premium payments?
No. CAGR only computes return metrics using initial and final capital values. For periodic cash flow sequences, use Internal Rate of Return (IRR) solvers.
Can CAGR be negative?
Yes. If the final value is less than the beginning value, the calculated CAGR will be negative, indicating a compound loss over the term.
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