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CAGR Calculator

Calculate the Compound Annual Growth Rate of any investment, portfolio, or metric to understand its true average annual growth over time.

Initial value ($)

Final value ($)

Number of years

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Everyday Uses

True growth rate

"Doubled in 6 years" sounds vague — CAGR turns it into an exact annual percentage you can compare.

Comparing investments

Put funds, stocks, and property on the same annualized scale regardless of holding period.

Business growth tracking

Measure revenue or customer growth across years in one clean, board-ready number.

Sanity-checking promises

Someone promises to triple your money in 5 years? That's a 24.6% CAGR — judge how realistic that is.

What the smoothing hides

CAGR erases every bad year on the way. Two investments with identical CAGR can have had completely different journeys, and that volatility matters if you might need the money at a bad moment.

Testing a growth claim

Choosing a favourable start year can transform a headline growth figure. Recalculating from a different base is the fastest way to see whether a claim survives contact with the data.

Frequently Asked Questions

What is CAGR and how is it calculated?

CAGR (Compound Annual Growth Rate) = (Ending Value ÷ Beginning Value)^(1 ÷ Years) − 1. It shows the steady annual rate at which an investment grew, smoothing out year-to-year volatility. Example: $10,000 growing to $18,000 in 5 years has a CAGR of (18,000÷10,000)^(1/5) − 1 = 12.5%.

What is the difference between CAGR and average annual return?

Simple average ignores compounding and overstates returns when there is volatility. If a stock rises 50% then falls 50%, simple average = 0%, but CAGR = −13.4% (you actually lost money). CAGR reflects the true ending value, making it far more accurate for multi-year comparisons.

What is a good CAGR for investments and businesses?

S&P 500 historical CAGR is ~10% per year (7% after inflation). Top-performing investment portfolios target 12–15%. Small businesses typically target 10–20% annual revenue CAGR. High-growth tech companies may achieve 30–50%+ CAGR in early years. Always compare CAGR to inflation and peers in the same industry.

How can I use CAGR to set investment targets?

Work backward: if you want $500,000 in 20 years starting with $50,000, solve CAGR = (500,000÷50,000)^(1/20) − 1 = 12.2%. That tells you the annual return your investments must average. You can then assess whether that is realistic given your asset allocation and risk tolerance.

What are the limitations of CAGR?

CAGR does not show the path or volatility of returns — two investments with the same CAGR can have very different risk profiles. It also assumes a fixed starting and ending point, so a bad end year can dramatically understate overall performance. Use CAGR alongside standard deviation and maximum drawdown for a fuller picture.