CAGR Calculator

Q: What is CAGR and how is it calculated?

CAGR stands for Compound Annual Growth Rate. It measures the mean annual growth rate of an investment over a specified period, assuming profits are reinvested each year. Formula: CAGR = (Ending Value / Beginning Value)^(1 / Years) − 1. For example, an investment that grows from $50,000 to $120,000 over 8 years has a CAGR of (120000/50000)^(1/8) − 1 = 11.61% per year.

Q: What is a good CAGR for an investment?

A 'good' CAGR depends on the asset class and time period. Broad stock market indices (e.g. S&P 500) have historically delivered around 7–10% CAGR over long periods. Real estate typically achieves 4–8%. Bonds often return 2–5%. A CAGR above 15% is generally considered excellent for a diversified portfolio, though it comes with higher risk. Short-term CAGR figures can be misleading due to volatility.

Q: What is the difference between CAGR and average annual return?

CAGR is a geometric average — it represents the single rate at which the investment would have grown if it grew at a constant rate each year. The simple (arithmetic) average of annual returns is always higher than CAGR when returns vary year to year. For example, returns of +50% and −50% give an arithmetic average of 0%, but CAGR of −13.4% (because $100 becomes $75 after those two years). CAGR is the more accurate measure of actual investor experience.

Q: Does CAGR account for taxes, fees, or inflation?

No — CAGR is a pre-tax, pre-fee, nominal growth rate. To get the real (inflation-adjusted) CAGR, subtract the inflation rate approximately: Real CAGR ≈ Nominal CAGR − Inflation Rate. For example, a 10% nominal CAGR with 3% inflation gives a real CAGR of roughly 7%. Fund fees (expense ratios) directly reduce your CAGR. A fund with 10% gross return and 1% annual fee effectively delivers 9% net CAGR to investors.

What's the average annual growth rate of your investment? Calculate CAGR, find required target values, and compare multiple investments side by side.

Currency

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Beginning value

Starting value of the investment

Ending value

Final value of the investment

Number of years

yrs

Time period between beginning and ending values

—

Estimates only. Results are before tax and fees. Consult a financial adviser for personalised guidance.

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How to Use This Calculator

Tab "Calculate CAGR"

Enter your beginning value, ending value, and number of years. The calculator instantly returns the CAGR as a percentage per year, along with total return, absolute gain or loss, and a bar chart showing how the value would have grown at that constant rate over time.

Tab "Reverse (Target)"

Work backwards from a goal. Choose whether you want to find the required ending value (enter beginning value, target CAGR, and years) or the number of years needed (enter beginning value, target ending value, and CAGR). Useful for planning: "If I invest $10,000 and need 10% CAGR for 10 years, what must my investment reach?"

Tab "Compare Growth Rates"

Enter up to 5 investments with their own beginning values, ending values, and time periods. The calculator ranks them by CAGR highest to lowest, making it easy to compare assets measured over different time horizons — for example, Bitcoin over 12 years vs gold over 10 years.

The Formula

CAGR (Compound Annual Growth Rate):
CAGR = (Ending Value / Beginning Value)^(1 / Years) − 1
Result is expressed as a decimal; multiply by 100 for percentage.

Reverse — Required ending value:
Ending Value = Beginning Value × (1 + CAGR)^Years

Reverse — Years needed:
Years = ln(Ending Value / Beginning Value) / ln(1 + CAGR)
where ln = natural logarithm

Rule of 72 (quick estimate):
Years to double ≈ 72 / CAGR%
e.g. at 10% CAGR: 72 / 10 = 7.2 years to double

All calculations use standard financial mathematics. No country-specific tax rates, inflation adjustments, or fees are applied. Results are nominal pre-tax estimates.

Worked Examples

Example 1 — Portfolio: $50,000 grows to $120,000 in 8 years

An investor's portfolio grows from $50,000 to $120,000 over 8 years. What was the annualised growth rate?

Beginning value$50,000

Ending value$120,000

Years8

CAGR11.61% / year

Absolute gain$70,000

Total return140%

Calculation: CAGR = (120,000 / 50,000)^(1/8) − 1 = (2.4)^0.125 − 1 = 1.1161 − 1 = 11.61%. This means the portfolio grew at an equivalent steady rate of 11.61% per year — even if actual year-by-year returns were uneven.

Example 2 — S&P 500: $1,000 invested in 2000 worth $6,500 in 2025

A passive index investor put $1,000 into an S&P 500 fund in 2000. By 2025 the position is worth $6,500. What was the CAGR?

Beginning value$1,000

Ending value$6,500

Years25

CAGR7.73% / year

Total return550%

Calculation: CAGR = (6,500 / 1,000)^(1/25) − 1 = (6.5)^0.04 − 1 = 7.73%. Despite the 2000 dot-com crash, 2008 financial crisis, and 2020 pandemic, the long-term annualised return was 7.73% — demonstrating the smoothing effect of CAGR across volatile periods.

Example 3 — Compare: Bitcoin vs Gold vs Real Estate

Comparing three asset classes over different time periods using the "Compare" tab.

Asset	Beginning	Ending	Years	CAGR
Bitcoin ★	$1	$60,000	12	122.0% / yr
Gold	$1,200	$2,400	10	7.2% / yr
Real Estate	$300,000	$550,000	10	6.3% / yr

Bitcoin's extraordinary CAGR of 122% per year reflects extreme early-stage growth — it started from near zero and came with enormous volatility and risk. Gold and real estate delivered more modest but far more predictable growth rates. CAGR alone does not measure risk: Bitcoin lost 80%+ of its value multiple times during this period. Use the Compare tab to rank any set of investments by annualised return.

Understanding CAGR: Key Concepts

What CAGR Really Means

CAGR is the geometric mean annual return — the single constant rate that would take you from the beginning value to the ending value over the specified number of years. It is a smoothed figure that removes year-to-year volatility. An investment with returns of +30%, −20%, +40% over 3 years has a CAGR of approximately 13.5%, even though no individual year achieved exactly 13.5%.

CAGR vs Arithmetic Average Return

The simple (arithmetic) average of annual returns is always equal to or greater than CAGR when returns vary. If a stock gains 50% one year and loses 50% the next, the arithmetic average is 0% — but CAGR is −13.4% (because $100 becomes $150 then $75). CAGR is the correct measure of actual investor wealth change over time. Always use CAGR when comparing multi-year investment performance.

Limitations of CAGR

Volatility is hidden. Two investments with identical CAGRs can have wildly different risk profiles. A private equity fund and a bond index might both return 8% CAGR, but one may have swings of ±40% per year while the other rarely moves more than ±5%.

CAGR is backward-looking. Past growth rates are not guarantees of future returns. A stock with 30% CAGR over 5 years may mean-revert sharply.

Start and end points matter. CAGR is highly sensitive to the chosen start and end dates. A 2009–2019 S&P 500 CAGR looks very different from a 2000–2010 one, even though both cover 10 years.

The Rule of 72

A useful mental shortcut: divide 72 by the CAGR percentage to estimate years to double your money. At 6% CAGR, money doubles in 72 ÷ 6 = 12 years. At 12% CAGR, in 6 years. At 3% CAGR, in 24 years. The Rule of 72 works well for rates between 2% and 20% and is based on the mathematics of compound growth.

CAGR and Inflation

CAGR as calculated here is a nominal rate — it does not adjust for inflation. To find your real CAGR (inflation-adjusted), use the approximate formula: Real CAGR ≈ Nominal CAGR − Inflation Rate. More precisely: Real CAGR = (1 + Nominal CAGR) / (1 + Inflation Rate) − 1. If your portfolio delivered 10% nominal CAGR and inflation averaged 3%, your real CAGR was approximately 6.8%.

Frequently Asked Questions

What is CAGR and how is it calculated?▼

CAGR (Compound Annual Growth Rate) is the mean annual growth rate of an investment over a period, assuming reinvestment. Formula: CAGR = (Ending Value / Beginning Value)^(1 / Years) − 1. For example, $50,000 growing to $120,000 over 8 years gives CAGR = (120,000/50,000)^(1/8) − 1 = 11.61% per year.

What is a good CAGR for an investment?▼

It depends on the asset class. Broad stock market indices historically deliver 7–10% CAGR over long periods. Real estate typically achieves 4–8%. Bonds often return 2–5%. A diversified portfolio achieving above 15% CAGR is generally considered excellent, though higher returns typically come with higher risk and volatility.

What is the difference between CAGR and average annual return?▼

CAGR is the geometric mean (compounded) and reflects actual wealth change. The arithmetic average of annual returns is always higher when returns vary. Example: returns of +50% and −50% give an arithmetic average of 0% but a CAGR of −13.4% — because $100 becomes $150 then $75. Use CAGR for comparing investments; use arithmetic average for estimating expected single-year returns.

Can CAGR be negative?▼

Yes. If the ending value is less than the beginning value, CAGR is negative — representing an annualised loss. For example, $10,000 declining to $6,000 over 4 years gives CAGR = (6,000/10,000)^(1/4) − 1 = −11.84% per year. Negative CAGR is common for individual stocks, sector funds during downturns, or any investment that lost value.

Does CAGR account for taxes, fees, or inflation?▼

No — this calculator gives nominal pre-tax CAGR. To adjust for inflation: Real CAGR = (1 + Nominal CAGR) / (1 + Inflation) − 1. Fees reduce CAGR directly (a 1% annual fee turns a 10% gross CAGR into a 9% net CAGR). Taxes on gains further reduce effective returns and vary by country and account type.

How do I compare investments made over different time periods?▼

CAGR is the ideal tool for this — it normalises returns to a per-year basis regardless of the investment length. Use the "Compare Growth Rates" tab to enter investments with different durations and rank them side by side. A 3-year investment and a 10-year investment can be meaningfully compared only after converting to CAGR.

What does it mean if two investments have the same CAGR?▼

Identical CAGR does not mean identical risk or investor experience. Two funds with 8% CAGR could have very different year-by-year volatility. One might be a stable bond fund with annual returns between 6–10%, while the other is a volatile equity fund swinging −30% to +50% each year. Always consider standard deviation, maximum drawdown, and Sharpe ratio alongside CAGR when evaluating investments.

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