CAGR Calculator

About the CAGR Calculator

Compound Annual Growth Rate (CAGR) is the smoothed annualized return of an investment over a specified period. Unlike simple average returns, CAGR accounts for the compounding effect and gives you a single number that reflects steady growth from beginning to end.

Our CAGR Calculator takes your beginning value, ending value, and time period, then delivers the annualized growth rate. You can also reverse the calculation — enter a target CAGR and starting value to find the required ending value, or determine how long it takes to reach a target at a given growth rate.

CAGR is the standard metric used by analysts, fund managers, and investors to compare the performance of different investments, business revenue growth, or any metric that changes over time. Unlike point-to-point returns that ignore the path money takes, CAGR smooths out year-to-year fluctuations and reveals the steady growth rate needed to reach the final value. It is the gold standard for benchmarking portfolio and business performance.

When This Page Helps

Simple averages can be wildly misleading. If an investment gains 100% one year and loses 50% the next, the simple average return is +25%, but your actual balance is exactly where you started. CAGR eliminates this distortion by showing the equivalent steady annual rate that takes you from point A to point B.

How to Use the Inputs

1. Enter the beginning value of your investment or metric.
2. Enter the ending value.
3. Enter the number of years between the two values.
4. View the CAGR, total return, and equivalent doubling time.
5. Use the reverse calculator to find the required ending value or years for a target CAGR.

Example Calculation

Tips & Best Practices

• Use CAGR to compare investments with different holding periods on an equal basis.
• CAGR hides volatility — two investments with the same CAGR may have very different risk profiles.
• A CAGR above 10% over 10+ years is exceptional for public equity investments.
• Revenue CAGR is commonly used to evaluate business growth in earnings reports.
• CAGR assumes reinvestment of all returns — if you withdrew income, actual results differ.
• Combine CAGR with standard deviation for a more complete risk-return picture.

Why CAGR Matters

CAGR is the standard language of investment performance. When a fund advertises a "10-year return of 12%," they mean CAGR. It is the basis for comparing stocks to bonds, real estate to equities, or one fund to another — regardless of how volatile the journey was.

Limitations to Keep in Mind

CAGR tells you where you ended up but says nothing about the ride. Two investments with identical CAGRs can have dramatically different risk profiles. One may have risen steadily while the other swung wildly. Always pair CAGR with volatility measures like standard deviation or maximum drawdown for a complete evaluation.

Practical Uses Beyond Investing

CAGR is equally useful for business metrics like revenue growth, user acquisition, or market size expansion. Analysts routinely cite revenue CAGR in earnings presentations to show a company's growth trajectory over three to five years.

Frequently Asked Questions

• What is CAGR?

  CAGR stands for Compound Annual Growth Rate. It is the annualized rate at which an investment would have grown if it had grown at a steady rate each year from a starting value to an ending value. It smooths out year-to-year volatility into a single representative number.

• How is CAGR different from average annual return?

  Average annual return is an arithmetic mean of yearly returns, which can overstate actual performance. CAGR is a geometric mean that accounts for compounding. For volatile investments, CAGR is always lower than the arithmetic average and more accurately reflects real growth.

• Can CAGR be negative?

  Yes. If your ending value is less than your beginning value, CAGR will be negative, indicating that the investment shrank over the period. A CAGR of -5% means you lost value at an equivalent rate of 5% per year.

• What CAGR has the S&P 500 delivered historically?

  From 1926 through 2025, the S&P 500 has delivered a CAGR of approximately 10% nominally and about 7% after adjusting for inflation. Individual decades vary significantly, from over 15% in strong periods to near 0% in weak ones.

• Does CAGR account for inflation?

  Not by default. To calculate real CAGR, adjust the ending value for inflation first, or subtract the inflation rate from the nominal CAGR as an approximation.

• When should I use CAGR vs. IRR?

  Use CAGR when you have a single lump-sum investment with a start and end value. Use IRR (Internal Rate of Return) when you have multiple cash flows over time — such as periodic contributions or withdrawals — because CAGR cannot account for interim inflows.