CAGR Calculator

This comprehensive CAGR calculator helps you calculate the compound annual growth rate of your investments, business revenue, or any value that grows over time. Whether you're tracking your stock portfolio performance, planning your startup's growth trajectory, or evaluating a real estate investment, this tool provides instant calculations and shows you how your growth rate compares to market benchmarks.

CAGR is particularly useful because it smooths out the ups and downs of year-to-year performance, giving you a clear picture of your average annual growth. For example, if your investment was worth $10,000 five years ago and is now worth $16,000, your CAGR tells you the steady annual rate that would have gotten you there—even if the actual journey had plenty of ups and downs along the way.

The calculator also shows you the total growth percentage and dollar difference, helping you understand both the rate of return and the actual wealth you've accumulated.

CAGR stands for Compound Annual Growth Rate. It's the rate at which an investment would have grown if it had grown at a steady rate each year, with returns reinvested. Think of it as the "smoothed out" version of your actual year-to-year performance.

Here's why CAGR is more useful than a simple average: Imagine your investment goes up 50% one year and down 20% the next. A simple average would say you gained 15% per year (50% - 20% = 30% / 2 years = 15%). But that's misleading because losses hurt more than gains help when you're dealing with percentages. CAGR accounts for this by showing you the actual compounded rate—the number that, if applied consistently each year, would get you from your starting point to your ending point.

This makes CAGR especially valuable for:

• Comparing investments with different time horizons or volatility
• Setting realistic expectations about what your money can grow to
• Evaluating business performance across multiple years
• Planning for financial goals like retirement or major purchases

The good news is that even modest CAGRs compound into significant wealth over long time periods. An 8% CAGR might not sound exciting, but over 30 years, it turns $10,000 into $100,627.

Using the CAGR calculator is straightforward. Here's what you need:

Step 1: Enter Your Annual Growth Rate Input the consistent percentage growth rate you want to calculate with. This is the CAGR percentage you want to apply to your investment.

Step 2: Enter the Number of Periods Enter how many time periods (typically years) the growth occurs over. For most investments, this is the number of years you've held the investment or plan to hold it.

Step 3: Enter Your Initial Value Input your starting amount—the value of your investment when you began, or the amount you're planning to invest.

Step 4: View Your Results The calculator instantly shows you:

• Final Value: What your investment grows to
• Difference: The dollar amount you've gained
• Total Growth: The percentage increase from start to finish

You can adjust any of the inputs to run different scenarios and see how changing your growth rate or time horizon affects your outcomes.

This is one of the most important questions, and the answer depends on what you're measuring and your time horizon. Here's what typical CAGRs look like across different investments:

| Investment Type | Typical CAGR Range | Notes |
|----------------|-------------------|--------|
| S&P 500 Index | 9-11% | Historical long-term average |
| Individual Stocks | -5% to 25%+ | Wide variation; higher risk |
| Real Estate | 3-5% | Appreciation only, excludes rental income |
| Small Businesses | 15-30% | Growth phase; moderates over time |
| High-Growth Startups | 100-300% | Early stage; unsustainable long-term |
| Bonds | 2-4% | Lower risk, lower returns |
| Savings Accounts | 0.5-2% | Very safe, minimal growth |

Context matters: A 12% CAGR over 20 years is excellent. The same 12% over 2 years might just reflect a good market run that's not sustainable. The good news is that even modest single-digit CAGRs compound into significant wealth over long time periods—that's the power of consistency.

Remember that higher CAGRs generally come with higher volatility and risk. An investment promising 50% CAGR should raise questions about what kind of risk you're taking on. The stock market's long-term average of around 10% is considered strong precisely because it's been sustainable over decades.

The formula for calculating CAGR is:

CAGR = (Ending Value / Beginning Value)^(1 / Number of Years) - 1

Let's break this down with a real example:

Scenario: You invested $5,000 in a mutual fund. Seven years later, it's worth $9,200. What's your CAGR?

Step 1: Divide ending by beginning value

• $9,200 / $5,000 = 1.84

Step 2: Raise to the power of (1 / number of years)

• 1.84^(1/7) = 1.84^0.1429 = 1.0916

Step 3: Subtract 1 and convert to percentage

• 1.0916 - 1 = 0.0916 = 9.16%

Result: Your investment grew at an average rate of 9.16% per year, which is solid performance that slightly outpaces the historical stock market average.

Here's the formula you can copy and paste:

=((Ending_Value/Beginning_Value)^(1/Years))-1

For our example: =((9200/5000)^(1/7))-1 returns 0.0916 or 9.16%

To display as a percentage, multiply by 100 or format the cell as a percentage.

Scenario: You bought 100 shares of a tech stock at $45/share in January 2018. In January 2025, those shares are worth $185/share.

• Initial Investment: $4,500
• Final Value: $18,500
• Time Period: 7 years
• CAGR Result: 22.3%

What this means: This 22.3% CAGR significantly outperforms the S&P 500's historical average of about 10%, though it also likely came with higher volatility. Tech stocks delivering 20%+ CAGR over 7 years typically experience significant ups and downs along the way. If you achieved this return, you've done exceptionally well—but it's worth remembering that this level of performance may not continue indefinitely.

Scenario: You're 35 years old with $50,000 in your 401(k). You want to know what growth rate you need to reach $1 million by age 65.

• Initial Value: $50,000
• Target Value: $1,000,000
• Time Period: 30 years
• Required CAGR: 10.5%

What this means: A 10.5% CAGR is achievable with a diversified portfolio heavily weighted toward stocks, as it's close to the stock market's long-term average. The good news is this is realistic over a 30-year timeframe, though you'll experience down years along the way. This calculation assumes you're not making additional contributions—if you continue adding to your 401(k), you'd need a lower CAGR to hit your goal.

Scenario: Your e-commerce business generated $75,000 in revenue in Year 1. Five years later, you're doing $520,000 annually.

• Initial Revenue: $75,000
• Current Revenue: $520,000
• Time Period: 5 years
• CAGR Result: 47.2%

What this means: A 47% CAGR shows strong business growth. For small businesses, 20-50% annual growth is common in the scaling phase, but it eventually moderates as the company matures. This kind of growth rate typically requires significant reinvestment of profits back into the business and often involves taking on debt or outside investment. If you're planning for future years, it's wise to model more conservative growth rates as you scale.

Scenario: You purchased a rental property for $285,000 in 2015. In 2025, it's appraised at $425,000.

• Purchase Price: $285,000
• Current Value: $425,000
• Time Period: 10 years
• CAGR Result: 4.1%

What this means: A 4.1% CAGR is solid for real estate appreciation alone. When you factor in rental income (which this CAGR doesn't include), your total return would be significantly higher. Real estate typically appreciates 3-5% annually on average, though this varies dramatically by location. Coastal metros often see higher appreciation, while rural areas may lag behind.

Here's why CAGR doesn't tell the whole story:

Two Investment Scenarios with Same CAGR:

Investment A (Steady Growth):

• Year 1: +10% | Year 2: +10% | Year 3: +10%
• CAGR: 10%

Investment B (Volatile Growth):

• Year 1: -20% | Year 2: +50% | Year 3: +10%
• CAGR: 10%

Both investments deliver the same 10% CAGR, but Investment B would have been a much bumpier ride. This is why CAGR alone doesn't tell the whole story—it smooths out the volatility you actually experienced. If you had to sell Investment B during Year 1's downturn, you would have locked in losses. CAGR assumes you held through the entire period.

These are NOT the same, and the difference can be significant:

Simple Average Return: Add up all the annual returns and divide by the number of years.

CAGR: The compounded rate that gets you from start to finish.

Example:

• Year 1: +30%
• Year 2: -10%
• Year 3: +20%

Simple Average: (30% - 10% + 20%) / 3 = 13.3%
Actual CAGR: 11.2%

The CAGR is lower because losses hurt more than gains help when you're compounding. This is why financial professionals prefer CAGR—it shows what actually happened to your money.

When to use CAGR:

• Single lump-sum investment
• No additional contributions or withdrawals
• Simple start-to-finish growth measurement

When to use IRR:

• Multiple contributions over time
• Irregular cash flows (like real estate with rental income)
• Evaluating investment timing decisions

If you're just tracking how a single investment has grown, CAGR is simpler and more intuitive. If you're making regular 401(k) contributions or analyzing a rental property with monthly income, IRR is more appropriate.

Track whether your stock picks are beating the market. Compare your portfolio's CAGR to the S&P 500's ~10% long-term average to see if active stock picking is worth your time, or if you'd be better off with index funds.

Project future revenue based on historical growth. If your business has grown at 25% CAGR for 3 years, you can model future scenarios—though it's wise to use conservative estimates as growth typically slows over time.

Determine if your current savings are on track. Input your current balance and desired retirement amount to see what CAGR you need. If it's unrealistic (above 12-15%), you may need to increase contributions.

Compare property appreciation rates across different markets or time periods. This helps you decide where to invest or whether to hold or sell current properties.

Investors often look at revenue or user CAGR to evaluate startup potential. Early-stage companies need to show 100%+ CAGR to attract funding, while later-stage companies might target 30-50%.

CAGR is incredibly useful, but it has one major blind spot: it can't show you the bumpy ride along the way.

What CAGR Doesn't Tell You:

1. Year-to-year volatility - Two investments with 12% CAGR could have wildly different risk profiles
2. Worst drawdowns - You won't know if there was a 50% drop somewhere in the middle
3. Cash flow timing - CAGR assumes no additional contributions or withdrawals
4. Risk-adjusted returns - A 15% CAGR with 40% volatility might not be better than 10% CAGR with 15% volatility

When CAGR Isn't the Right Metric:

• Short time periods (under 3 years) - Too influenced by market timing luck
• Regular contributions - Use IRR or money-weighted return instead
• High volatility investments - Consider Sharpe ratio or other risk-adjusted metrics alongside CAGR
• Comparing vastly different asset classes - Need to account for risk differences

1. Compare Apples to Apples
Only compare CAGRs over the same time periods. A 20% CAGR over 3 years isn't directly comparable to 12% over 20 years.

2. Look at Multiple Time Horizons
Check 1-year, 3-year, 5-year, and 10-year CAGRs if you have the data. This helps you spot whether performance is recent luck or sustained excellence.

3. Consider Risk Alongside Returns
A 25% CAGR sounds great until you realize it came with 60% drawdowns that would have tested your resolve to hold.

4. Use with Other Metrics
Combine CAGR with standard deviation (volatility), maximum drawdown, and Sharpe ratio for a complete picture.

5. Be Conservative in Projections
Historical CAGR doesn't guarantee future performance. When planning, use conservative estimates (6-8% for diversified portfolios rather than the historical 10%).

6. Account for Fees and Taxes
The CAGR you calculate should ideally reflect after-fee and after-tax returns for a realistic picture of what you're actually keeping.

This calculator is for educational and planning purposes. Historical CAGR doesn't guarantee future performance. Markets are unpredictable, and past results shouldn't be your only guide for future decisions.

Consult with financial professionals for personalized investment advice that accounts for your risk tolerance, time horizon, and financial goals. A certified financial planner can help you build a comprehensive strategy that goes beyond simple CAGR calculations.

Tax implications: The CAGR calculated here doesn't account for taxes, which can significantly impact your actual returns, especially in taxable accounts. Consider using tax-advantaged accounts like 401(k)s and IRAs when possible.

Inflation matters: A 7% nominal CAGR might only be 4-5% in real (inflation-adjusted) terms. When planning long-term, consider using real returns rather than nominal returns for more conservative projections.

Ready to calculate your CAGR? Enter your numbers into the calculator above and see how your investments stack up against market benchmarks. Understanding your growth rate is the first step to making informed financial decisions.