CAGR Calculator

How to Use This Calculator

This calculator has four modes. The default one—Calculate CAGR—is what most people need. Just enter your starting value, ending value, and the time period. You'll get your compound annual growth rate plus useful extras like doubling time and future projections.

Future Value mode works the other way around. Tell it how much you're starting with, what growth rate you expect, and how long you'll invest. It shows you where you'll end up. You can add regular contributions too—monthly or annually—which is handy for retirement planning.

Required Starting Value is for goal-based planning. Got a target like $1 million for retirement? Enter that along with your expected growth rate and timeline. The calculator tells you how much you need to invest today. And if you want to compare multiple investments or revenue streams, Compare Rates mode ranks up to five side by side.

What Is CAGR?

CAGR tells you the average yearly growth rate of an investment—but it accounts for compounding. If your portfolio went from $10,000 to $25,000 over five years, CAGR gives you the single annual percentage (20.11% in this case) that would produce the same result if growth happened smoothly every year.

Why does compounding matter? Because each year's growth builds on all the previous years. A 10% return doesn't add a flat $1,000 every year. In year one, you'd gain $1,000. But in year two, you're earning 10% on $11,000—that's $1,100. Year three, you're earning on $12,100. The growth accelerates.

CAGR is the standard because it lets you compare investments fairly. An investment that tripled in ten years and one that doubled in five years—which grew faster? Their CAGRs tell you instantly. But here's the catch: CAGR smooths everything out. It won't show you if an investment crashed 40% one year before bouncing back. Two investments with identical CAGRs could have taken very different paths.

How Is CAGR Different from Average Return?

You can measure returns a few different ways. CAGR is the compound annual growth rate. Simple average return adds up yearly returns and divides by the number of years. Total return tells you the overall gain from start to finish. They answer different questions—and can give you very different numbers.

Here's why simple average can be misleading. Say an investment gains 100% in year one, then loses 50% in year two. Simple average: (100% + -50%) ÷ 2 = 25%. Sounds great, right? But check the actual math. $10,000 becomes $20,000 after year one, then drops back to $10,000. You made nothing. CAGR correctly shows 0%.

This happens because percentage gains and losses aren't symmetric. A 50% drop needs a 100% gain just to break even. Simple average treats them like they cancel out. CAGR doesn't make that mistake.

Total return is simple—it's your total gain as a percentage. From $10,000 to $25,000 is a 150% total return. But total return doesn't account for time. A 100% return sounds impressive until you learn it took 20 years. That's only about 3.5% CAGR—barely ahead of inflation.

How Do You Calculate CAGR?

Three steps. First, divide your ending value by your beginning value. If you turned $10,000 into $25,000, that's 2.5—you ended with 2.5 times what you started.

Second, take the nth root, where n is the number of years. For five years, that's the 5th root. The 5th root of 2.5 is 1.2011. This converts your total growth into an annual factor.

Third, subtract 1. That turns your growth factor (1.2011) into a growth rate (0.2011, or 20.11%). In Excel, use: =((EndValue/BeginValue)^(1/Years))-1. Double-check by working forward: $10,000 × 1.2011^5 should equal $25,000.

That's it. Three steps, one number that tells you exactly how fast your money grew.

What Is the Rule of 72?

The Rule of 72 is a mental shortcut. Divide 72 by your annual growth rate, and you get approximately how many years it takes to double your money. At 8% growth, money doubles in about 9 years (72 ÷ 8 = 9). At 12%, it doubles in 6 years.

It works best for rates between 6% and 10%. Outside that range, it gets rougher. But for quick mental math—checking if someone's growth claims make sense, figuring out milestone years—you'll use it all the time. You can flip it around too. If someone says their investment doubled in six years, that's roughly 12% CAGR (72 ÷ 6 = 12). Tripled in ten years? About 11.5% CAGR. It's a fast sanity check when you don't have a calculator handy.

How Do Businesses Use CAGR?

Revenue CAGR is the growth metric you'll hear most in business. When a company says "25% revenue CAGR over five years," they're describing how fast their sales grew on an annualized, compounded basis. Investors, analysts, and executives all use it because comparing companies gets easier.

Three-year and five-year CAGRs are standard. Three years shows recent momentum. Five years smooths out more noise and shows whether growth is sustainable. What counts as "good" varies by industry—software companies might target 30%+ while mature consumer goods companies consider 5% solid.

Beyond revenue, companies track CAGR for earnings, customer count, market share, and assets. Revenue CAGR outpacing earnings CAGR might signal margin problems. Customer CAGR below revenue CAGR means you're getting more from each customer. Looking at multiple CAGRs together tells you more than any single number.

How Do Investors Use CAGR?

The S&P 500 has returned roughly 10-11% CAGR over the long term (with dividends reinvested). That's the benchmark most investors compare against. Beat that consistently over a decade? You're doing well. Fall short? You might be better off in an index fund.

Mutual funds and ETFs report CAGR for 1-year, 3-year, 5-year, and 10-year periods. The longer timeframes matter more—anyone can have a good year. And remember: past CAGR says nothing about what'll happen next. A stock with 30% CAGR might crash tomorrow.

Watch out for price return versus total return. Price return only counts stock price changes. Total return includes dividends reinvested. For dividend-heavy stocks, total return CAGR can be 2-3 percentage points higher.

What Does a Negative CAGR Mean?

Negative CAGR means value shrank. A stock going from $100 to $60 over five years has a CAGR of -9.7%—it lost value at nearly 10% per year.

Recovery math is harsh. A 40% drop needs about 67% gain just to get back to even. At 10% annual growth from the bottom, that takes over five years. The steeper the drop, the longer and harder the climb back.

For companies, negative revenue CAGR should make you ask questions. Is the market shrinking? Are they losing share? Sometimes there's a reasonable explanation—like selling off a division—but persistent negative CAGR usually means trouble.

What Are the Downsides of CAGR?

CAGR hides volatility. Two investments can both show 12% CAGR, but one grew steadily while the other swung from +50% to -30%. Same destination, very different rides. If you needed to pull money out during that -30% year, your experience was terrible—despite what the final CAGR says.

Start and end dates matter a lot. A stock measured from its 2021 peak looks very different from one measured from its 2022 bottom. This creates room for cherry-picking. Question any CAGR figures without clear date context.

CAGR breaks down when there are cash flows. It only uses beginning and ending values. If you added money at the bottom or withdrew at the top, your real return is different from what CAGR shows. For portfolios with deposits and withdrawals, use IRR or XIRR instead.

A few more mistakes to avoid: confusing CAGR with simple average (simple average always overstates volatile returns), projecting recent high CAGR forever (growth rates always slow eventually), and ignoring fees and taxes.

When Should You Use IRR or XIRR Instead?

CAGR works well for simple situations—money in at the start, money out at the end. But most real investing isn't that clean. You add to your 401(k) every month. You withdraw for a house down payment. CAGR can't handle that.

IRR (Internal Rate of Return) handles regular periodic cash flows—if you invest $500 monthly for ten years and end with $85,000, IRR finds the growth rate that makes all those contributions plus the final balance work out mathematically. XIRR goes further and handles irregular cash flows with specific dates. Most brokerage platforms report XIRR-based returns because that's how real portfolios work.

What About Inflation-Adjusted Returns?

Nominal CAGR is the raw number. Real CAGR adjusts for inflation. If your investment grew 8% but inflation was 3%, your purchasing power only increased about 5%. That's your real return.

The formula: Real CAGR = ((1 + Nominal) / (1 + Inflation)) - 1. At 8% nominal with 3% inflation: (1.08 / 1.03) - 1 = 4.85% real return.

Real returns matter more for long-term planning. An 8% nominal projection sounds fine until you realize your purchasing power only grows at 5%.

What Are Typical CAGRs by Category?

Some rough benchmarks: the S&P 500 has historically returned 10-11% CAGR including dividends. Bonds run 4-6% for corporates, 3-5% for government. Real estate appreciation averages 3-5% nationally. Inflation typically runs 2-3%.

What counts as good depends on company size. Startups might target 100%+ in early years. Growth-stage companies aim for 30-50%. Mature businesses consider 10-15% strong. Steady 5-8% CAGR means a stable, profitable company.

If you're consistently beating 10% CAGR over long periods, you're doing well. Below inflation, and you're actually losing ground. Use these benchmarks as a reality check, not hard targets.

How Can You Use CAGR for Projections?

Multiply your current value by (1 + CAGR)^years. Starting with $50,000 at 7% CAGR for 20 years: $50,000 × 1.07^20 = $193,484. At 7% CAGR, your money roughly doubles every 10 years (Rule of 72: 72 ÷ 7 ≈ 10).

Got a goal in mind? Work backwards. Need $1 million in 25 years at 8% CAGR? Required starting amount: $1,000,000 / 1.08^25 = $146,018. Can't invest that much? You'll need a higher return, more time, or regular contributions.

One thing though—projections get less reliable the further out you go. Five years at historical averages? Reasonable. Thirty years assumes the future looks like the past—and it won't. Run multiple scenarios instead of betting on one number.