CAGR Calculator
Calculate the compound annual growth rate of your investments, project future values, or determine how long to reach your target.
Calculate CAGR
Compound Annual Growth Rate
Start
$10,000.00
End
$25,000.00
Year-by-Year Growth
| Year | Value | Growth |
|---|---|---|
| 0 | $10,000.00 | - |
| 1 | $12,011.24 | +$2,011.24 |
| 2 | $14,427.00 | +$2,415.75 |
| 3 | $17,328.62 | +$2,901.62 |
| 4 | $20,813.83 | +$3,485.21 |
| 5 | $25,000.00 | +$4,186.17 |
What is CAGR?
CAGR (Compound Annual Growth Rate) is the rate of return that would be required for an investment to grow from its beginning balance to its ending balance, assuming the profits were reinvested at the end of each period of the investment's life.
CAGR Formula
CAGR = (FV / PV)^(1/n) - 1
- FV = Final Value (ending balance)
- PV = Present Value (beginning balance)
- n = Number of years
Future Value Formula
FV = PV × (1 + CAGR)^n
Use this formula to project how much your investment will be worth at a given growth rate over a specific time period.
Why CAGR Matters
- 1.Smooths out volatility: CAGR provides a single growth rate that "smooths" the irregular growth pattern.
- 2.Easy comparison: Compare investments with different time periods or starting values.
- 3.Realistic expectations: Understand the average annual return your investment achieved.
- 4.Future planning: Project future values based on historical or expected growth rates.
Typical CAGR Benchmarks
| Investment Type | Historical CAGR Range | Notes |
|---|---|---|
| S&P 500 | ~10% | Long-term average (100+ years) |
| Bonds | 4-6% | Lower risk, lower return |
| Real Estate | 8-12% | Including appreciation and income |
| Gold | 1-3% | Hedge against inflation |
| Savings Account | 0.5-2% | Very low risk |
CAGR Limitations
Ignores Volatility
CAGR assumes steady growth, hiding the ups and downs along the way.
Not a Predictor
Past CAGR doesn't guarantee future performance.
Ignores Cash Flows
Doesn't account for additional investments or withdrawals.
Terminal Values Only
Only considers start and end values, not intermediate performance.
Worked Example: Calculating CAGR Step by Step
Say you invested $10,000 and it grew to $25,000 over 5 years. Apply the formula CAGR = (FV / PV)1/n − 1:
- Divide the final value by the initial value: 25,000 ÷ 10,000 = 2.5
- Raise the result to the power of 1/5 (the reciprocal of the number of years): 2.50.2 ≈ 1.2011
- Subtract 1 and convert to a percentage: 1.2011 − 1 = 0.2011, or about 20.11% per year
The total gain was 150%, but the annualized rate is 20.11% — not 150 ÷ 5 = 30% — because compounding means each year's growth builds on the previous year's balance. This is exactly why CAGR beats a simple average when comparing investments: an asset that gains 50% one year and loses 30% the next has an average return of +10% but a CAGR of only about 2.5% (1.5 × 0.7 = 1.05 over two years).
CAGR vs. Average Annual Return
The arithmetic average of yearly returns always overstates real compounded performance whenever returns fluctuate — a consequence of volatility drag. CAGR is the geometric mean, so it tells you the single steady rate that would have produced the same end result. When a fund advertises "annualized return," that figure is a CAGR.
This calculator also works in reverse: given a target future value and a rate, it solves for the required starting amount (PV = FV ÷ (1 + r)n) or the time needed (n = ln(FV/PV) ÷ ln(1 + r)). For a quick mental check on doubling time, the Rule of 72 says money doubles in roughly 72 ÷ rate years — about 7.2 years at 10% CAGR.
Frequently Asked Questions
How do I calculate CAGR from a starting and ending value?+
Divide the ending value by the starting value, raise the result to the power of 1 divided by the number of years, then subtract 1. For example, $10,000 growing to $25,000 in 5 years gives (25000/10000)^(1/5) − 1 ≈ 20.11% per year. Enter the two values and the time period in the calculator and it does this instantly.
What is the difference between CAGR and average annual return?+
The average annual return is a simple arithmetic mean of yearly returns, while CAGR is the geometric mean that accounts for compounding. When returns fluctuate, the average always overstates real performance: gaining 50% then losing 30% averages +10% per year, but the actual CAGR is only about 2.5%. CAGR reflects what your money actually did.
What is a good CAGR for an investment?+
It depends on the asset class and risk. The S&P 500 has returned roughly 10% CAGR over the long term (about 7% after inflation), bonds historically 4-6%, and savings accounts 0.5-2%. A portfolio consistently compounding above 10% per year over a decade or more is beating the broad US stock market.
Can this calculator find how long it takes to reach a target amount?+
Yes. Besides computing CAGR itself, the tool has modes to solve for future value, required initial investment, or the time period. For the time mode it uses n = ln(FV/PV) / ln(1 + rate) — for example, doubling your money at 10% per year takes about 7.3 years.
Is the CAGR calculator free, and is my financial data private?+
Yes. The calculator is free, requires no sign-up, and runs entirely in your browser — the amounts you enter are never transmitted or stored anywhere. It works on mobile, tablet, and desktop.
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