CAGR Calculator
Calculate compound annual growth rate, project future value, or find how long to reach your investment goal.
Parameters
What was my annual growth rate?
Compound Annual Growth Rate
$10,000 grew to $25,000 in 8 years
Total Return
150%
Total Gain
$15,000
How does your CAGR compare?
Growth Projection
12.14% CAGR compounded annually
Results are for informational purposes only and do not constitute financial advice. Actual returns may vary due to market conditions, taxes, and fees. Read our full disclaimer.
What is CAGR (Compound Annual Growth Rate)?
CAGR — Compound Annual Growth Rate — is the single most useful metric for measuring and comparing investment performance over time. It answers the question: "If this investment had grown at a perfectly steady annual rate, what would that rate have been?" CAGR smooths out the volatility of year-to-year returns and expresses multi-year growth as a single, comparable annual percentage.
CAGR is used everywhere in finance: fund managers report it to describe portfolio performance, analysts use it to project revenue growth, and investors use it to compare assets that grew over different time periods. Its power is in standardization — a 3-year CAGR and a 15-year CAGR can be directly compared in a way that total returns cannot.
The CAGR Formula and Its Three Variations
Calculate CAGR from start and end values:
CAGR = (End Value / Start Value)^(1 / Years) − 1
Calculate future value from CAGR:
End Value = Start Value × (1 + CAGR)^Years
Calculate years needed to reach a goal:
Years = ln(End Value / Start Value) / ln(1 + CAGR)
The value of the investment at the end of the measurement period.
The value of the investment at the beginning of the measurement period.
Number of years between start and end. Can be fractional (e.g. 2.5 years).
The smoothed annual growth rate — the rate that produces the same end value if applied consistently each year.
Step-by-Step Calculation Examples
Example 1: Calculate CAGR of an Investment
Your portfolio grew from $50,000 to $127,000 over 9 years. What was your CAGR?
Set up the formula
CAGR = ($127,000 / $50,000)^(1/9) − 1
Calculate the ratio
$127,000 / $50,000 = 2.54
Apply the exponent
2.54^(1/9) = 2.54^0.1111 = 1.1097
Subtract 1
CAGR = 1.1097 − 1 = 0.1097 = 10.97% per year
Verify
$50,000 × (1.1097)^9 = $50,000 × 2.540 = $127,000 ✓
Example 2: Calculate Years Needed at a Given CAGR
You have $30,000 and want $100,000. Your portfolio earns 8% CAGR. How long will it take?
Apply the years formula
Years = ln($100,000 / $30,000) / ln(1 + 0.08)
Calculate the ratio
ln(3.333) = 1.2040
Calculate ln(1.08)
ln(1.08) = 0.07696
Divide
Years = 1.2040 / 0.07696 = 15.64 years
Quick check with Rule of 72
Doubling takes 9 years at 8%; $30K doubles to $60K in 9 years, then to $120K in 18 years. $100K falls between — 15.6 years is consistent.
CAGR vs Average Annual Return: Why the Difference Matters
This distinction is one of the most important and most frequently misunderstood concepts in investment analysis. The arithmetic mean (simple average) and the geometric mean (CAGR) can produce dramatically different results from the same return sequence.
Illustrative example: $10,000 with volatile returns
| Year | Annual Return | Portfolio Value |
|---|---|---|
| Start | — | $10,000 |
| Year 1 | +50% | $15,000 |
| Year 2 | −33% | $10,050 |
| Year 3 | +40% | $14,070 |
| Year 4 | −29% | $9,990 |
| Year 5 | +35% | $13,487 |
Arithmetic Mean (misleading)
+12.6% / year
(50 − 33 + 40 − 29 + 35) / 5
CAGR (true picture)
+6.17% / year
($13,487/$10,000)^(1/5) − 1
The arithmetic mean says 12.6% — more than double the actual CAGR of 6.17%. The portfolio grew by only $3,487, not the $8,091 that 12.6% per year would imply. CAGR reflects reality; arithmetic mean does not.
CAGR Benchmarks Across Asset Classes
Understanding what CAGR different asset classes have historically delivered helps calibrate whether a given investment result is strong, average, or disappointing.
| Asset Class | Nominal CAGR | Real CAGR (after 3% inflation) | Period |
|---|---|---|---|
| U.S. Large-Cap Stocks (S&P 500) | ~10.0% | ~6.8% | 1926–2023 |
| U.S. Small-Cap Stocks | ~11.5% | ~8.3% | 1926–2023 |
| International Developed Stocks | ~8.0% | ~5.0% | 1970–2023 |
| U.S. Long-Term Bonds | ~5.5% | ~2.4% | 1926–2023 |
| U.S. Real Estate (home prices) | ~4.5% | ~1.4% | 1890–2023 |
| REITs (total return) | ~10.5% | ~7.3% | 1972–2023 |
| Gold | ~7.5% | ~4.4% | 1971–2023 |
| Cash / T-Bills | ~3.4% | ~0.4% | 1926–2023 |
| Balanced 60/40 Portfolio | ~8.5% | ~5.3% | 1926–2023 |
* Historical averages. Past performance does not guarantee future results. Sources: Ibbotson/Morningstar, Shiller, FTSE NAREIT, World Gold Council.
What $10,000 Becomes at Different CAGRs Over Time
The table below illustrates the dramatic long-term impact of different CAGR rates on a single $10,000 investment with no additional contributions.
| CAGR | 10 Years | 20 Years | 30 Years | 40 Years |
|---|---|---|---|---|
| 2% | $12,190 | $14,859 | $18,114 | $22,080 |
| 4% | $14,802 | $21,911 | $32,434 | $48,010 |
| 6% | $17,908 | $32,071 | $57,435 | $102,857 |
| 7% | $19,672 | $38,697 | $76,123 | $149,745 |
| 8% | $21,589 | $46,610 | $100,627 | $217,245 |
| 10% | $25,937 | $67,275 | $174,494 | $452,593 |
| 12% | $31,058 | $96,463 | $299,599 | $930,510 |
| 15% | $40,456 | $163,665 | $662,118 | $2,678,635 |
* $10,000 initial investment, no additional contributions. Values rounded to nearest dollar.
The difference between 8% and 10% CAGR over 40 years is $235,348 on a single $10,000 investment — a 2 percentage point difference that produces more than double the final value. This is why minimizing fees, taxes, and trading costs — each of which reduces effective CAGR by tenths of a percent — matters so profoundly over long investment horizons.
Real-World Applications of CAGR
Evaluating Investment Funds
Fund managers report 1-year, 3-year, 5-year, and 10-year CAGR returns in their fact sheets. Comparing a fund's 10-year CAGR to its benchmark index CAGR immediately reveals whether active management added or subtracted value. A fund with a 9.2% 10-year CAGR vs its benchmark's 10.1% underperformed by nearly a full percentage point per year — compounded over a decade, that gap represents substantial lost wealth.
Business Revenue Growth
Analysts and investors use revenue CAGR to assess business health and trajectory. A company growing revenues at 15% CAGR for 5 years is expanding rapidly; a 2% CAGR suggests maturity or stagnation. In valuation models, projected revenue CAGR is one of the key inputs — small differences in assumed growth rate can change a company's calculated fair value by 30-50%.
Comparing Real Estate Returns
A house purchased for $250,000 and sold 12 years later for $480,000 shows a CAGR of ($480K/$250K)^(1/12) − 1 = 5.6%. Comparing this to a stock portfolio's CAGR over the same period — accounting for rental income on the real estate side and dividends on the stock side — gives an accurate picture of which investment performed better.
Projecting Goal Timelines
CAGR works in both directions for financial planning. If you need $500,000 in 15 years and have $120,000 today, the required CAGR is ($500K/$120K)^(1/15) − 1 = 10.04%. You can then assess whether a portfolio achieving that rate is realistic for your risk tolerance, or whether you need to increase contributions to reach the goal with a lower return assumption.
Common CAGR Mistakes and Misconceptions
Confusing CAGR with average annual return
These two metrics can differ dramatically for volatile investments. An investment gaining 100% one year and losing 50% the next has an average annual return of 25% — but a CAGR of 0%, because it ended exactly where it started. Fund performance materials sometimes use whichever metric looks better. Always confirm whether a quoted figure is CAGR (geometric mean) or average annual return (arithmetic mean).
Using CAGR to predict future performance
CAGR measures what happened — it is a backward-looking measurement of historical growth. Past CAGR does not predict future CAGR. A stock with a 25% CAGR over 5 years may have simply benefited from favorable sector conditions that are unlikely to persist. Use historical CAGR as context for what is possible, not as a projection of what will happen.
Ignoring the start and end date selection effect
CAGR is highly sensitive to the start and end dates chosen for the measurement period. A calculation that begins at a market trough and ends at a peak will show an inflated CAGR. Fund managers sometimes select favorable measurement periods to show superior CAGR. Always check the specific time period and ask whether the start or end dates are unusual. A 10-year CAGR starting in March 2009 (market bottom) looks dramatically better than one starting in March 2007.
Applying CAGR to investments with irregular cash flows
CAGR assumes a single lump sum investment — one starting value and one ending value. If you added contributions or took withdrawals during the period, the standard CAGR formula gives a misleading result. In those cases, use XIRR (Extended Internal Rate of Return) or a money-weighted return calculation, which accounts for the timing and size of each cash flow.
Frequently Asked Questions
What is a good CAGR for an investment portfolio?
Context determines what constitutes a good CAGR. For a diversified equity portfolio, the S&P 500 historical CAGR of approximately 10% (nominal) or 7% (real) is the standard benchmark. Consistently exceeding this benchmark after fees over 10+ years is exceptional — most active fund managers fail to do so. For a conservative portfolio with bonds, 5-7% nominal CAGR is reasonable. For individual real estate or business investments, CAGR should be compared to what the same capital would have earned in public markets of equivalent risk.
How is CAGR different from IRR?
CAGR applies to a single investment with one initial and one final value, with no intermediate cash flows. IRR (Internal Rate of Return) handles multiple cash flows at different times — the rate that makes the NPV of all cash flows equal to zero. For a simple buy-and-hold stock investment, CAGR and IRR give the same answer. For a real estate investment with rental income, a business with quarterly earnings, or a portfolio with ongoing contributions, IRR is the appropriate metric because it accounts for the timing of each cash flow.
Can CAGR be negative?
Yes. If an investment lost value over the measurement period, the CAGR will be negative. For example, a stock that fell from $10,000 to $6,000 over 5 years has a CAGR of ($6,000/$10,000)^(1/5) − 1 = −9.55% per year. Negative CAGR simply means the investment declined at that compounded annual rate. A CAGR of −50% over 1 year means the investment lost half its value.
How do I calculate CAGR in Excel?
In Excel, use the formula: =(End_Value/Start_Value)^(1/Years)-1. For example, if your starting value is in cell B2, ending value in B3, and number of years in B4, the formula is: =(B3/B2)^(1/B4)-1. Format the result as a percentage. You can also use the RRI function: =RRI(Years, Start_Value, End_Value), which gives the same result and may be more readable for others.
Does CAGR account for dividends and distributions?
Only if you include them in your end value calculation. For a stock investment, CAGR calculated from price alone ignores dividends. Total return CAGR — the complete picture — requires either using a total return index (which reinvests dividends) or manually tracking the value of reinvested dividends. For mutual funds, NAV-based CAGR typically includes dividend reinvestment if you selected that option. Always confirm whether a published CAGR is price return or total return.
How does CAGR relate to the Rule of 72?
The Rule of 72 is a practical shortcut derived from CAGR mathematics. If you know your CAGR, divide 72 by it to get approximate doubling time in years. If your CAGR is 8%, money doubles in roughly 9 years. Conversely, if you know your doubling time, divide 72 by those years to estimate the required CAGR. This relationship holds because the natural logarithm of 2 (approximately 0.693) times 100 gives about 69.3, and 72 is a convenient approximation that is divisible by many common rates.
References
- →Compound Annual Growth Rate (CAGR) — Investopedia
- →Rate of Return — U.S. Securities and Exchange Commission (SEC) / Investor.gov
- →Stocks, Bonds, Bills, and Inflation (SBBI) Yearbook — Ibbotson Associates / Morningstar
- →Understanding Investment Returns — FINRA Investor Education Foundation
- →Geometric Mean Return — CFA Institute
Sattva
·Reviewed by Prana
·Updated July 2026
Fintech developer and personal finance writer. All content reviewed for accuracy against established financial standards.