CAGR Calculator
Find the compound annual growth rate of any investment
📊 Investment details
Last updated June 2026
Method: Uses the standard geometric CAGR formula, CAGR = (Ending Value / Beginning Value)^(1 / Years) - 1. This is the same compound-growth math used in finance to annualize multi-year returns.
Included: Compound annual growth rate, total growth over the period, total gain in dollars, the growth multiple, time to double at that rate, and a smoothed year-by-year value table.
Not included: Mid-period contributions or withdrawals, fees, taxes, inflation and real-world volatility. CAGR is a smoothed average, not a forecast.
CAGR calculator: everything you need to know
Suppose you invested $10,000 and five years later it was worth $25,000. The total return is 150%, but that number alone does not tell you how fast the money grew each year. The compound annual growth rate (CAGR) answers that: it works out to about 20.11% per year. In other words, a steady 20.11% annual return, compounded, would have turned $10,000 into $25,000 over those five years. That single, comparable per-year figure is exactly what this CAGR calculator gives you.
The CAGR formula
CAGR is a geometric average, so it captures the effect of compounding:
CAGR = (Ending Value ÷ Beginning Value)(1 ÷ Years) − 1 Plugging in the example: (25,000 ÷ 10,000) = 2.5, then 2.5 raised to the power of (1 ÷ 5) = 2.50.2 ≈ 1.2011, and subtracting 1 gives 0.2011, or 20.11%. Multiply by 100 to express it as a percentage. The result is the constant annual rate that links the start and end values.
Why CAGR beats a simple average
Imagine an investment that gains 100% one year and loses 50% the next. The simple average return is (100% − 50%) ÷ 2 = 25% per year - which sounds great. But in reality $100 became $200 and then fell back to $100: the actual growth was 0%. CAGR returns the correct 0% because it is a geometric average that respects compounding. Whenever yearly returns vary, CAGR is lower than (or equal to) the simple average, and it is the honest number to quote.
CAGR vs. total growth
Total growth tells you the overall change across the whole period (ending ÷ beginning, minus one) - useful, but it depends on how long you held the investment. CAGR converts that into a per-year rate so you can compare a 3-year holding against a 10-year one on equal footing. This calculator shows both, plus the dollar gain and the "growth multiple" (how many times the original value the investment became).
Common uses for CAGR
- Comparing investments: annualize each one over the same period and compare the rates directly.
- Benchmarking a fund or stock: see whether its multi-year growth beat an index.
- Business metrics: revenue, users or profit growth over several years is often reported as a CAGR.
- Goal planning: work backward to see what annual rate would reach a target value.
How to use this CAGR calculator
You only need three numbers, and the result updates the moment you finish typing. Work through the fields in order:
- Beginning value: enter what the investment was worth at the start of the period - the amount you originally put in, or the balance on the first date you are measuring from.
- Ending value: enter what it is worth now, or at the end of the period. If you want a total-return figure, use a value that already includes reinvested dividends or interest.
- Number of years: enter the elapsed time between those two values. You can use a decimal (for example 2.5) if the period is not a whole number of years.
Read the CAGR at the top, then check the supporting numbers below it: total growth, dollar gain, the growth multiple, and how long money would take to double at that rate. The year-by-year table shows the smoothed path the constant rate would have taken - useful for sanity-checking, not a record of what actually happened.
A second worked example: a declining investment
CAGR is just as useful when an investment loses value. Say a position was worth $20,000 three years ago and is worth $14,000 today. The total change is −30%, but the per-year rate is what tells the real story: (14,000 ÷ 20,000) = 0.7, then 0.7 raised to the power of (1 ÷ 3) ≈ 0.8879, and subtracting 1 gives about −11.21% per year. So the holding shrank at roughly 11.2% annually, compounded. A negative CAGR is read exactly like a positive one - it is the steady annual rate that links the start and end values, just pointing downward.
Scenario comparison: same gain, different timelines
Two investments can post the identical total gain yet have very different CAGRs, because time is part of the math. Suppose each one doubles your money (a growth multiple of 2x):
- Doubles in 3 years: 2(1 ÷ 3) − 1 ≈ 26.0% CAGR - a very strong annual rate.
- Doubles in 7 years: 2(1 ÷ 7) − 1 ≈ 10.4% CAGR - close to a typical long-run stock-market figure.
- Doubles in 15 years: 2(1 ÷ 15) − 1 ≈ 4.7% CAGR - more like a conservative bond return.
The headline "it doubled" sounds the same in all three cases, but the speed - and therefore the quality - of the growth is wildly different. That is exactly why CAGR is the fairer comparison than raw total return.
Who this calculator is for
Anyone who needs to turn a "then and now" pair of values into a single comparable rate will find it useful. That includes:
- Long-term investors checking the annualized return of a stock, ETF, or mutual fund over several years.
- Retirement savers measuring how a 401(k) or IRA balance has grown across a multi-year stretch.
- Founders and analysts reporting revenue, subscriber, or user growth, which is conventionally expressed as a CAGR.
- Students and the curious learning the difference between geometric and arithmetic averages.
- Goal planners who want to know what annual rate it would take to reach a target value by a chosen date.
Key terms explained
- Compounding: earning returns on prior returns, not just on the original amount. CAGR exists specifically to capture this effect.
- Geometric mean: the type of average CAGR uses. Unlike the arithmetic (simple) mean, it multiplies the year-over-year growth factors and takes a root, so it never overstates compounded growth.
- Total return: the overall percentage change across the whole period. CAGR converts total return into a per-year rate.
- Growth multiple: ending value divided by beginning value (for example 2.5x). It is the base of the CAGR formula before the root is taken.
- Nominal vs. real: a nominal rate ignores inflation; a real rate subtracts it to show the change in actual purchasing power.
- IRR (internal rate of return): a related measure that, unlike CAGR, can handle deposits and withdrawals along the way.
What changes the CAGR result
Because the formula has only three inputs, each one moves the answer in a predictable way:
- The ratio of ending to beginning value sets how much total growth there is - a bigger multiple means a higher CAGR.
- The number of years spreads that growth out - the same multiple over more years produces a lower annual rate.
- Small changes in the time period matter more than people expect, especially over short horizons, because the exponent is 1 divided by the years.
- Whether your values include dividends can shift the result by a percentage point or more for income-paying assets.
What counts as a "good" CAGR? Typical benchmarks
There is no universal "good" rate - it depends entirely on the asset class and the risk you took to get it. Still, having rough reference points helps you judge whether a result is strong, average, or worrying. The figures below are long-run, broad averages, not promises, and your own period can look very different:
- Broad U.S. stock market: the long-run nominal total return has historically clustered around 9%-10% CAGR before inflation - but only over multi-decade horizons, with brutal single-year swings along the way.
- A diversified 60/40 portfolio: mixing stocks and bonds typically lands in the 6%-8% range, trading some upside for a smoother ride.
- Investment-grade bonds: often 3%-5%, closer to prevailing interest rates.
- High-yield savings or CDs: roughly tracks short-term rates, frequently 2%-5%, with little risk to principal.
- Inflation itself: averaging around 2%-3% in normal years - any nominal CAGR below this is actually losing purchasing power.
The honest test is risk-adjusted: a 12% CAGR from a single volatile stock is not obviously "better" than an 8% CAGR from a diversified fund, because the first one carried a real chance of a much worse outcome. To see how a given annual rate compounds a balance forward over time, pair this tool with the Investment Calculator, and remember that all of these benchmarks are nominal - subtract inflation to compare real growth.
Using CAGR for business and revenue growth
CAGR is not just an investing metric - it is the standard way founders, analysts, and investors describe how a business has grown over several years. Annual revenue, active users, subscribers, monthly recurring revenue, or profit are plugged into the exact same formula: take the latest figure, divide by the earliest, raise to the power of one over the number of years, and subtract one. A startup that grew from $2 million to $8 million in revenue over four years has a CAGR of (8 ÷ 2)(1 ÷ 4) − 1 ≈ 41.4% per year, even though revenue did not climb by the same amount each year.
Reporting growth as a single CAGR is popular for the same reason it works for investments: it smooths out lumpy years into one comparable rate, so a board can compare this year's trajectory against last year's, or against a competitor's, on equal terms. The same cautions apply, though. A high revenue CAGR off a tiny starting base can look spectacular while masking slowing momentum, and a CAGR says nothing about profitability, churn, or whether the growth is sustainable. Treat a business CAGR as a headline summary, then look at the year-by-year figures behind it before drawing conclusions.
Limitations and assumptions
CAGR is a clean, comparable number, but it deliberately hides a lot. Keep these assumptions in mind:
- It assumes a single lump sum at the start and no money added or removed afterward - if you made contributions or withdrawals, use IRR instead.
- It smooths away all volatility, so a calm 8% and a chaotic path that also averages 8% look identical.
- It is nominal and ignores fees, taxes and inflation, all of which reduce what you actually keep.
- It is backward-looking: a past CAGR describes what happened, not what will happen next.
- Over very short periods it can produce extreme annualized rates that are not meaningful to project forward.
How it compares to related calculators
This page answers "at what steady annual rate did this grow?" If your question is slightly different, a sister tool fits better:
- To find the simple percentage gain or loss on a single transaction, use the ROI Calculator.
- To project how a balance grows forward with regular contributions, use the Investment Calculator.
- To grow a present amount to a future value at a given rate, use the Future Value Calculator.
- To measure the total return of a stock including price change and dividends, use the Stock Return Calculator.
Sources
- U.S. Securities and Exchange Commission (SEC), Investor.gov - Compound interest and how returns compound over time.
- U.S. Securities and Exchange Commission (SEC), Investor.gov - Investing basics: returns, risk and the long term.
- U.S. Bureau of Labor Statistics (BLS) - Consumer Price Index (for adjusting nominal growth to a real rate).
⚠️ Common mistakes & edge cases
Confusing CAGR with the average return
Averaging the yearly returns ignores compounding and overstates growth when returns swing. A +100% / -50% sequence averages to 25% but has a CAGR of 0%. Always use the geometric CAGR for multi-year performance.
Ignoring contributions and withdrawals
CAGR only looks at the first and last values. If you added or withdrew money along the way, the figure no longer reflects your true rate of return - use a money-weighted return (IRR) instead.
Using the wrong number of years
The exponent is 1 divided by the number of years the money was actually invested. Using 6 years instead of 5, or counting calendar years instead of full years held, can noticeably distort the rate.
Treating CAGR as a forecast
CAGR is backward-looking and perfectly smooth. A real investment that returned a 12% CAGR almost certainly did not gain 12% every year - and past growth does not guarantee future results.
❓ Frequently asked questions
What is CAGR?
CAGR stands for Compound Annual Growth Rate. It is the constant annual rate at which an investment would have grown if it had grown at the same steady pace every year, with profits reinvested. Because it accounts for compounding, CAGR is a more accurate measure of growth over multiple years than a simple average of yearly returns.
How is CAGR calculated?
CAGR = (Ending Value / Beginning Value)^(1 / Number of Years) - 1, expressed as a percentage. For example, growing $10,000 to $25,000 over 5 years gives (25,000 / 10,000)^(1/5) - 1 = 2.5^0.2 - 1 ≈ 0.2011, or about 20.11% per year.
What is the difference between CAGR and total growth?
Total growth is the overall percentage change across the whole period (ending value divided by beginning value, minus one). CAGR converts that total into a single per-year rate that accounts for compounding. $10,000 growing to $25,000 is a total growth of 150%, but a CAGR of about 20.1% per year over 5 years.
What is the difference between CAGR and average annual return?
A simple average just adds the yearly returns and divides by the number of years, ignoring compounding and volatility. CAGR is a geometric average that reflects how money actually compounds, so it is always less than or equal to the simple average when returns vary. CAGR is the better single number for comparing investments.
Can CAGR be negative?
Yes. If the ending value is lower than the beginning value, CAGR is negative, showing the average annual rate at which the investment declined. For instance, $10,000 falling to $8,000 over 3 years produces a CAGR of about -7.2% per year.
What are the limitations of CAGR?
CAGR smooths out all volatility, so it hides the bumpy path an investment actually took - a steady 8% and a wild ride that averages 8% look identical. It also ignores additional contributions or withdrawals during the period, as well as fees, taxes and inflation. Use it to compare growth, not to predict future results.
How do I use CAGR to compare investments?
Calculate the CAGR of each investment over the same time period and compare the per-year rates directly. Because CAGR normalizes for the length of the period and for compounding, it lets you fairly compare a 3-year investment against a 10-year one, or a stock against a fund.
What inputs do I need to calculate CAGR?
Only three: the beginning value (what the investment was worth at the start), the ending value (what it is worth now or at the end of the period), and the number of years between those two points. You do not need the year-by-year returns - CAGR is derived entirely from the first value, the last value, and the elapsed time.
Does CAGR account for dividends and reinvested income?
Only if your beginning and ending values already reflect them. CAGR is just the math that links a start value to an end value, so the result is a price-only growth rate unless you use a total-return (dividends-reinvested) ending value. To capture income, plug in values that include reinvested dividends or interest.
How does inflation affect CAGR?
The CAGR this calculator returns is nominal - it is not adjusted for inflation. To get the real (inflation-adjusted) growth rate, subtract the average annual inflation rate, or more precisely divide (1 + CAGR) by (1 + inflation) and subtract one. A 7% nominal CAGR with 3% inflation is roughly a 3.9% real rate, which is what actually grew your purchasing power.
Why does the calculator show a time-to-double figure?
Time to double tells you how long it would take your money to grow 2x at the calculated CAGR, found with the formula ln(2) / ln(1 + CAGR). It is a quick gut-check on the rate: the well-known Rule of 72 (72 divided by the percentage rate) gives a close approximation, so a 9% CAGR doubles money in about 8 years.
Is a higher CAGR always better?
Not necessarily. A higher CAGR usually came with higher risk and bigger swings along the way, and a single CAGR figure hides that volatility entirely. Two investments with the same CAGR can have very different worst years. Use CAGR to compare growth, but weigh it against the risk, time horizon and your own tolerance for drawdowns.
What is a good CAGR for an investment?
It depends on the asset and the risk taken. As rough long-run benchmarks, the broad U.S. stock market has historically averaged about 9%-10% nominal CAGR over multi-decade periods, a balanced 60/40 portfolio around 6%-8%, investment-grade bonds 3%-5%, and cash-like savings 2%-5%. Because inflation runs roughly 2%-3%, any nominal CAGR below that is losing purchasing power. A 'good' rate is one that beats inflation and compensates you fairly for the risk you accepted.
How do I calculate CAGR for business revenue?
Use the same formula with financial figures instead of investment values: CAGR = (Latest revenue / Earliest revenue)^(1 / Number of years) - 1. For example, revenue growing from $2 million to $8 million over four years gives (8 / 2)^(1/4) - 1, about 41.4% per year. The same approach works for users, subscribers, MRR or profit, which is why company growth is usually reported as a CAGR.
How do you annualize a multi-year return?
Annualizing means converting a total multi-year return into a single per-year rate, which is exactly what CAGR does. Take the growth multiple (ending value divided by beginning value), raise it to the power of one divided by the number of years, and subtract one. For instance a 60% total gain over 4 years annualizes to 1.6^(1/4) - 1, roughly 12.5% per year - far lower than the 15% you would get by naively dividing 60% by 4, because compounding does part of the work.
💡 Good to know
CAGR is a smoothed average, not the real path
A 10% CAGR almost never means the investment gained exactly 10% every year. It is the single steady rate that would have produced the same start-to-finish result. The year-by-year table shows that ideal smooth path, not the bumps the investment actually took.
Use the same dates for a fair comparison
CAGR depends heavily on the period you choose. Comparing one fund's 2020-2023 CAGR with another's 2018-2025 CAGR is misleading. Line up identical start and end dates so the rates are comparable.
The Rule of 72 is a handy shortcut
Divide 72 by the CAGR percentage to estimate how many years it takes to double your money. A 9% CAGR doubles money in about 8 years; a 6% CAGR in about 12. It is a close, no-calculator approximation of the exact time-to-double figure above.