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📈 CAGR Calculator

Calculate Compound Annual Growth Rate (CAGR) — the smoothed annual return of an investment over multiple years — or forecast a future value at a given CAGR.

Just want total return, not an annual rate?

This page computes the smoothed annual growth rate. For cumulative return over the whole period, use the ROI Calculator →

What is CAGR (Compound Annual Growth Rate)?

Compound Annual Growth Rate (CAGR) is the steady per-year rate at which an investment would have grown to its ending value: CAGR = (Ending ÷ Beginning)^(1÷years) − 1. Because it uses geometric growth, CAGR lets you compare investments held for different periods on an equal annual footing — the standard metric for multi-year performance.

Use this page when the time period matters and you want an annualized rate, not a total return. It also forecasts future value if you supply a target CAGR and horizon. CAGR smooths volatility, so pair it with risk measures for a full picture.

If you just want the total percentage gain or loss on an investment from start to finish — without annualizing — use the ROI Calculator, which reports cumulative return.

CAGR Formula

Calculate CAGR:

CAGR = (Ending Value ÷ Beginning Value)^(1 ÷ Years) − 1

Calculate Future Value:

Ending Value = Beginning Value × (1 + CAGR)^Years

How to Use This Calculator

  1. 1
    Choose Mode
    "Calculate CAGR" finds the growth rate from a beginning and ending value. "Future Value" projects forward from a known CAGR.
  2. 2
    Enter Your Values
    For CAGR: enter beginning value, ending value, and years held. For FV: enter beginning value, CAGR%, and years.
  3. 3
    Review Results
    See CAGR%, total return %, and total gain in dollars to compare against benchmarks.
  4. 4
    Compare Investments
    Use CAGR to compare investments with different time periods on an equal footing.

Real-World Example

You invested $10,000 in 2014. By 2024 it grew to $25,000 (10 years).

CAGR = (25,000 ÷ 10,000)^(1÷10) − 1
CAGR = (2.5)^0.1 − 1 = 9.60% per year
Total Return = 150% over 10 years

How the CAGR Calculator Works

Formula, assumptions, and calculation steps for this finance tool.

Methodology

Financial calculators use time-value-of-money, rate conversion, amortization, or return formulas depending on the tool. Inputs are normalized to matching periods before the final result is calculated.

Calculation Steps

  1. Enter the principal amounts, rates, terms, or cash flows requested by the calculator.
  2. Convert annual rates to the correct monthly, daily, or yearly period when needed.
  3. Apply the finance formula for payment, return, yield, or future value.
  4. Show the result with supporting totals such as interest, gain, or balance.

Assumptions and Limits

  • Rates are assumed constant unless the calculator asks for a schedule.
  • Taxes, fees, and inflation are included only when fields are provided.
  • Financial results are estimates for planning, not investment or lending advice.

Frequently Asked Questions

CAGR (Compound Annual Growth Rate) is the rate at which an investment would have grown each year if it grew at a steady rate. It smooths out volatility to provide a single comparable growth rate.

Average return simply averages yearly returns (+50%, -33% = 8.5% avg). CAGR calculates the actual geometric return (+50%, -33% = 0% CAGR — you're back where you started). CAGR reflects what you actually earned.

The S&P 500 has historically delivered ~10% CAGR over long periods. Individual stocks or funds with 15%+ CAGR over 10+ years are considered excellent. Anything above 20% over a decade is exceptional.

Yes. If your ending value is less than your beginning value, CAGR is negative. For example, investing $10,000 and having $8,000 after 5 years gives a CAGR of about -4.3%.

Use CAGR to compare investments held for different time periods. Use total return when comparing investments over the same period, or when time-weighting doesn't matter.

Real-World Applications

📈
Investment Portfolio Analysis
Investors use CAGR to compare the true performance of different assets held over different periods — stocks, bonds, real estate, or alternative investments — on an equal footing.
💼
Business Revenue Growth
CEOs and investors use CAGR to express and evaluate revenue growth: "Our revenue grew from $5M to $20M over 6 years — a 26% CAGR" conveys the trajectory more clearly than a raw dollar figure.
🏦
Retirement Planning
Financial advisers use CAGR to project retirement portfolios: if your $100,000 today grows at 7% CAGR, it will reach $386,968 in 20 years — helping clients set savings targets.
📊
Market Research & Forecasting
Analysts publish market size forecasts using CAGR: "The global EV market is projected to grow at 24% CAGR from 2023 to 2030." This instantly communicates the scale and pace of growth.
🏢
Private Equity & M&A
PE firms use CAGR to evaluate target company historical growth and underwrite projected returns from an investment, comparing against minimum hurdle rates (typically 20–25% CAGR).
💊
Pharmaceutical R&D ROI
Drug companies calculate the CAGR of revenues from a product launch to evaluate whether the multi-year investment in clinical trials and regulatory approval generated acceptable returns.

Common Mistakes

1
Confusing CAGR with Average Annual Return
If an investment gains 50% in year 1 and loses 33% in year 2, the simple average return is +8.5% but the CAGR is 0% — you are back where you started. CAGR reflects what you actually earned; averages do not.
2
Applying CAGR to Volatile Assets
CAGR masks volatility. Two investments with 10% CAGR over 10 years can have wildly different risk profiles. Always pair CAGR with a volatility or maximum drawdown metric for a complete picture.
3
Using CAGR to Predict Future Returns
Historical CAGR does not guarantee future performance. Markets mean-revert; past growth can reflect unique conditions that no longer apply. Use CAGR for historical description, not future certainty.
4
Selecting Favourable Time Periods
"Cherry-picking" start and end points to inflate CAGR is a common marketing tactic. A fund launched at a market trough will show higher CAGR than one launched at a peak — always compare consistent periods.
5
Ignoring Dividends and Total Return
CAGR calculated from price appreciation only understates total return for dividend-paying stocks. Use total return (price + reinvested dividends) CAGR for an accurate comparison against bonds or other assets.

Historical CAGR Benchmarks

Asset Class Approx. CAGR (long-run) Notes
S&P 500 (total return) ~10% US large cap equities, 90+ year average
US 10-Year Treasury Bond ~3–5% Varies with interest rate cycles
Global Real Estate (REITs) ~7–9% Income + appreciation combined
Gold ~7–8% Since 1971 (post Bretton Woods)
Cash (savings rate) ~2–4% Below long-run inflation in real terms
Warren Buffett (Berkshire) ~20% 1964–2022; among the highest sustained CAGRs

References

  1. Bodie, Z., Kane, A. & Marcus, A. J. Investments, 12th ed. McGraw-Hill, 2021.
  2. Siegel, J. J. Stocks for the Long Run, 6th ed. McGraw-Hill, 2022.
  3. CFA Institute. Global Investment Performance Standards (GIPS). cfainstitute.org.
  4. Berkshire Hathaway. Annual Report Letters to Shareholders. berkshirehathaway.com.
  5. Damodaran, A. Investment Valuation, 3rd ed. Wiley, 2012.

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