CAGR Calculator: Compound Annual Growth Rate
Find the compound annual growth rate of any investment, project future values, or calculate how long to reach a target.
📊 What is CAGR (Compound Annual Growth Rate)?
Compound Annual Growth Rate (CAGR) is the standard metric for measuring investment performance over multi-year periods. It represents the constant annual rate at which an investment would need to grow, with compounding, to reach its ending value from its starting value over a given number of years. Because it smooths out volatile year-to-year fluctuations into a single representative rate, CAGR is far more informative than a simple average of annual returns when evaluating any investment that compounds over time.
CAGR is used everywhere in finance and business: mutual fund and ETF performance is quoted as 1-year, 3-year, 5-year, and 10-year CAGR; company revenue growth is described as CAGR in annual reports and analyst presentations; market size forecasts use CAGR to project where a sector will be in 5 or 10 years; venture capital funds report fund performance as CAGR (IRR for deals with multiple cash flows); and personal investors use CAGR to compare their portfolio performance against index benchmarks.
One of the most important things to understand about CAGR is the difference between arithmetic and geometric means. If a stock gains 50% in year 1 and loses 33% in year 2, the arithmetic average return is (50 - 33) / 2 = 8.5%, but the true CAGR is 0% because you end up where you started. CAGR always reflects the geometric compounding reality of investing, not the misleading arithmetic average that fund managers sometimes quote to make performance look better than it is.
This calculator solves CAGR three ways: given start and end values you can find the CAGR; given a starting value and CAGR you can project a future ending value; and given start and end values plus a target CAGR you can find how many years it takes to reach a goal. The calculator also shows the Rule of 72 doubling time, total return percentage, net gain, and investment multiple for each scenario.
📐 Formula
📖 How to Use This Calculator
Steps
💡 Example Calculations
Example 1: Find CAGR for a Stock Portfolio
Portfolio grew from $50,000 to $112,000 including dividends reinvested over 8 years
Example 2: Project Ending Value for a Retirement Account
Current retirement balance $75,000 invested at an assumed 8% CAGR for 20 years
Example 3: Find Years Needed to Reach a Savings Goal
How long to grow $30,000 to $100,000 at a 10% CAGR?
❓ Frequently Asked Questions
🔗 Related Calculators
What is CAGR (Compound Annual Growth Rate) and how is it calculated?
CAGR is the annualized rate at which an investment grows over a multi-year period, assuming growth compounds each year. The formula is CAGR = (End Value / Begin Value)^(1/n) - 1, where n is the number of years. CAGR gives a single clean rate that describes how an investment performed, smoothing out volatile year-to-year swings.
What is the CAGR formula?
CAGR = (End Value / Begin Value)^(1/n) - 1. Example: an investment grows from $10,000 to $18,000 over 5 years. CAGR = (18,000 / 10,000)^(1/5) - 1 = 1.8^0.2 - 1 = 0.1247 = 12.47% per year. To express as a percentage, multiply by 100.
What is a good CAGR for an investment?
For stock investments, 10% to 15% CAGR is considered strong, roughly matching or beating long-run equity index returns. For individual growth stocks, 20% or more CAGR over 5 or more years is exceptional. For business revenue growth, 15% to 25% CAGR is strong for a mid-size company. For GDP, 2% to 4% CAGR is normal in developed economies. Context matters: always compare CAGR to a relevant benchmark.
What is the difference between CAGR and average annual return?
Average annual return is the arithmetic mean of annual returns. CAGR is the geometric mean, which compounds. If an investment returns +50% in year 1 and -33% in year 2, the arithmetic average is 8.5%, but the true CAGR is exactly 0% (you end up where you started: $100 becomes $150 then $100.50 with rounding, essentially flat). CAGR always gives the true return because it reflects compounding.
What is the Rule of 72 and how does it relate to CAGR?
The Rule of 72 is a mental shortcut: divide 72 by the CAGR percentage to estimate how many years it takes to double your money. At 8% CAGR, money doubles in roughly 72/8 = 9 years. At 12%, it doubles in 72/12 = 6 years. The rule is an approximation; the exact doubling time is ln(2) / ln(1 + CAGR). This calculator shows the exact doubling time for any CAGR.
How is CAGR used to evaluate mutual funds and ETFs?
Fund performance is almost always reported as CAGR for standard periods: 1-year, 3-year, 5-year, and 10-year. When comparing two funds, always compare CAGR over the same time period. A fund with 20% CAGR over 3 years may simply have been lucky in a bull run. A fund with 15% CAGR over 10 years demonstrates consistent outperformance through multiple market cycles.
What is the difference between CAGR and IRR?
CAGR measures the annualized return between two points: a beginning value and an ending value. It assumes a single lump-sum investment. IRR (Internal Rate of Return) handles multiple cash flows at different times, such as annual dividends received or staged capital calls. For a simple investment with one entry and one exit, CAGR and IRR give the same result. For investments with multiple cash flows, use IRR.
Can CAGR be negative? What does it mean?
Yes. Negative CAGR means the investment lost value over the period. An investment falling from $10,000 to $6,000 over 4 years has CAGR = (6,000 / 10,000)^(1/4) - 1 = -11.6% per year. A negative CAGR is a compound annual loss rate. When starting value is greater than ending value, CAGR will always be negative.
How is CAGR used in business growth reporting?
In business, CAGR describes revenue growth, earnings growth, subscriber growth, or any metric that compounds over time. An investor presentation might state: revenue grew from $50M to $121M over 5 years, a 19.3% CAGR. This is more informative than listing each year individually and avoids cherry-picking favorable years. CAGR is also used in industry reports to describe market size projections (CAGR of 12% from 2024 to 2030).
How do I calculate ending value from CAGR?
Use the Find Ending Value mode: Ending Value = Starting Value x (1 + CAGR)^n. Example: $20,000 invested at 10% CAGR for 15 years gives $20,000 x 1.10^15 = $20,000 x 4.177 = $83,545. This is the same formula as compound interest with annual compounding.
How do I find how long it takes to reach a target value?
Use the Find Years mode: Years = ln(End Value / Begin Value) / ln(1 + CAGR). Example: to grow $10,000 to $50,000 at 12% CAGR, Years = ln(5) / ln(1.12) = 1.609 / 0.1133 = 14.2 years. The natural logarithm converts the exponential growth equation into a linear one.
What is total return versus CAGR?
Total return is the overall percentage change from start to end: (End - Begin) / Begin x 100. CAGR is the annualized equivalent. A $10,000 investment growing to $25,000 over 8 years has a total return of 150% and a CAGR of 12.1% per year. Both are correct; total return describes the full gain, CAGR describes the annual pace. Use total return for a simple statement of profit; use CAGR to compare across time horizons.
Does CAGR assume dividends are reinvested?
The CAGR formula itself is agnostic. When you enter the ending value, you decide whether to include dividends. If you use only the price appreciation (no dividends), you get price return CAGR. If you include dividends in the ending value (reinvested), you get total return CAGR. Total return CAGR is almost always higher and is the proper measure of investment performance. This calculator lets you choose by entering the appropriate ending value.