Lesson 20 of 28 · What your return really is · 3 min read · Reviewed 15 Oct 2026
Absolute return is the total change; CAGR (compound annual growth rate) is the steady yearly rate that gets you there. ₹10 lakh growing to ₹20 lakh is a 100% absolute return. Over 6 years that is about 12.2% a year; over 5 years, about 14.9%.
“My investment doubled” sounds good, but it means little without the time it took. Doubling in 5 years and in 12 years are very different results.
CAGR spreads the growth evenly over the years so you can compare one investment with another, or with an FD rate.
Key idea: For SIPs and investments with many deposits and withdrawals, use XIRR. It is CAGR worked out for each cash flow.
Try the calculator and the one-question quiz on this page to check your own numbers.
(Final value ÷ starting value) raised to the power 1 ÷ years, minus 1. The calculator here does it for you.
Funds show returns for set periods, such as 3 or 5 years, from one date to another. Your own return depends on when you put money in.
Compare it with an alternative over the same years: an FD, an index fund, or inflation.
For learning only, not investment advice. Designed and built by people who have worked at India’s leading wealth management firms.