📈 Finance Tool
CAGR Calculator - Compound Annual Growth Rate Calculator Online Free
Calculate your compound annual growth rate (CAGR), project future investment value, or find the starting capital needed to reach your financial goals. Includes year-by-year growth table, visual breakdown, and benchmark comparisons.
Quick Presets
Beginning Value
$10,000
Ending Value
$25,000
Number of Years
10 years
Starting Investment
$10,000
Expected CAGR
10.0%
Number of Years
10 years
Target Value
$100,000
Expected CAGR
10.0%
Number of Years
10 years
Compound Annual Growth Rate (CAGR)
9.60%
✅ Your investment grew 9.60% annually over 10 years
Total Return
150.00%
Absolute Growth
$15,000
Doubling Time
7.5 yrs
Monthly Return
0.77%
Growth Visualization
📋 Year-by-Year Growth Table
| Year | Value | Growth ($) | Growth (%) |
|---|
🏆 Your CAGR vs Benchmarks
⚠️ Disclaimer: This calculator provides estimates for educational and planning purposes only. CAGR assumes steady growth, which does not reflect the volatility of real investments. Past performance does not guarantee future results. Consult a qualified financial advisor before making investment decisions.
📘 How the CAGR Calculator Works
The Compound Annual Growth Rate (CAGR) represents the mean annual growth rate of an investment over a specified period longer than one year. Our calculator offers three powerful modes to help you analyze past performance or plan future investments.
1
Choose Your Mode
Select from three calculation modes: Calculate CAGR from known values, project a Future Value using an expected growth rate, or determine the Starting Amount needed to reach a target goal.
2
Enter Your Values
Use the sliders or type directly into the input boxes. Try the quick presets for common investment scenarios, or customize every value to match your specific situation.
3
Analyze the Results
Instantly see your CAGR, total return, doubling time, year-by-year growth table, visual breakdown, and how your growth rate compares to popular investment benchmarks.
📊 Understanding CAGR: A Complete Guide
CAGR is one of the most widely used metrics in finance because it smooths out the effects of volatility and gives you a single, clean annual growth figure. Here is everything you need to know to interpret and use CAGR effectively.
What CAGR Tells You
CAGR shows the rate at which an investment would have grown if it grew at the same rate every year. It strips out annual volatility, giving you the smoothed average return that turns your starting value into your ending value over the period.
CAGR vs Average Return
Average annual return simply adds yearly returns and divides by the number of years. CAGR accounts for compounding, making it more accurate. An investment returning +50% then -50% has a 0% average but a negative CAGR, reflecting the actual loss.
When to Use CAGR
Use CAGR when comparing returns across different investments, evaluating portfolio performance over time, analyzing business revenue growth, or setting realistic financial goals based on historical data.
Limitations of CAGR
CAGR does not reflect investment risk or volatility. Two investments can have the same CAGR but very different year-to-year experiences. It also assumes all gains are reinvested and does not account for taxes, fees, or cash flows like deposits or withdrawals.
Rule of 72
A quick mental shortcut: divide 72 by the CAGR percentage to estimate how many years it takes to double your money. At 8% CAGR, your money doubles in approximately 9 years (72 ÷ 8 = 9). At 12%, it takes about 6 years.
CAGR in Business
Beyond investing, CAGR is widely used to measure business revenue growth, user acquisition rates, market expansion, and industry trends. A company with 20% revenue CAGR over five years has been growing rapidly and compounding that growth.
🌍 Real-World CAGR Examples
To put CAGR in perspective, here are some well-known historical growth rates that show the power of compounding across different asset classes and time periods.
S&P 500 Index
~10% CAGR
- Historical average over the past 50+ years
- $10,000 invested in 1980 would be worth over $1 million today
- Includes dividends reinvested
- Includes periods of major crashes and recoveries
- The most common benchmark for stock market investors
Real Estate (US Median)
~4-5% CAGR
- US median home prices over the past 40 years
- Does not include rental income or leverage effects
- Varies significantly by location and property type
- Historically beats inflation by 1-2% per year
- Major cities can see higher CAGR than rural areas
Gold
~7-8% CAGR
- Long-term average since gold became freely traded in 1971
- Acts as an inflation hedge during economic uncertainty
- Highly volatile year-to-year despite solid long-term CAGR
- Does not generate income (no dividends or interest)
- Popular safe-haven asset during market downturns
🧮 CAGR Formulas Explained
Understanding the mathematics behind CAGR helps you verify results and apply growth rate concepts to any investment, business metric, or financial plan.
Basic CAGR Formula
CAGR = (Ending Value / Beginning Value) ^ (1 / Number of Years) - 1. This gives the constant annual rate needed to grow the beginning value to the ending value over the specified period.
Future Value Formula
Future Value = Beginning Value × (1 + CAGR) ^ Years. Use this to project how much your investment will be worth at a given annual growth rate over a specific time period.
Required Starting Amount
Starting Amount = Target Value / (1 + CAGR) ^ Years. This reverse calculation tells you how much to invest today to reach your goal, given an expected CAGR and time horizon.
Doubling Time
Doubling Time = ln(2) / ln(1 + CAGR), where ln is the natural logarithm. This tells you exactly how many years it takes for an investment to double at a given CAGR. Alternatively, use the Rule of 72: Years ≈ 72 / CAGR%.
❓ Frequently Asked Questions
What is CAGR and why is it important?
CAGR stands for Compound Annual Growth Rate. It measures the mean annual growth rate of an investment over a period longer than one year, assuming profits are reinvested. It is important because it provides a single, smoothed rate of return that makes it easy to compare different investments, evaluate portfolio performance, and set realistic financial goals.
How do I calculate CAGR manually?
To calculate CAGR manually, divide the ending value by the beginning value, raise the result to the power of (1 divided by the number of years), then subtract 1. For example, if you invested $10,000 and it grew to $25,000 in 10 years: CAGR = (25000 / 10000)^(1/10) - 1 = 2.5^0.1 - 1 = 0.0960 = 9.60%. You can use a scientific calculator or the power function in a spreadsheet.
What is the difference between CAGR and average annual return?
Average annual return is the simple arithmetic mean of yearly returns, while CAGR is the geometric mean that accounts for compounding. CAGR is always equal to or less than the average return. For example, if an investment goes up 100% one year and down 50% the next, the average return is 25% but the CAGR is 0% because the investment returned to its starting value. CAGR gives a more accurate picture of actual wealth creation.
What is a good CAGR for investments?
A good CAGR depends on the asset class and risk level. For stocks, a 7-10% CAGR after inflation is considered strong (the S&P 500 has historically returned about 10% nominally). For bonds, 3-5% is typical. For real estate, 4-6% in property value appreciation is common. Any CAGR that consistently beats inflation (2-3%) is creating real wealth. Higher CAGRs typically come with higher risk and volatility.
Can CAGR be negative?
Yes, CAGR can be negative if the ending value is less than the beginning value. This means the investment lost value over the period. For example, if you invested $10,000 and it was worth $7,000 after 5 years, the CAGR would be approximately -6.87%. A negative CAGR indicates that you would have been better off keeping the money in a simple savings account.
How is the doubling time calculated?
Doubling time is calculated using the formula: ln(2) / ln(1 + CAGR), where ln is the natural logarithm. A quicker approximation is the Rule of 72: simply divide 72 by the CAGR percentage. At 8% CAGR, money doubles in about 9 years (72/8=9). At 10% CAGR, it doubles in about 7.2 years. This rule works best for growth rates between 2% and 20%.
Does CAGR account for inflation?
CAGR by itself is a nominal figure and does not account for inflation. To get the real (inflation-adjusted) CAGR, you can subtract the average inflation rate from the nominal CAGR as an approximation, or use the formula: Real CAGR = ((1 + Nominal CAGR) / (1 + Inflation Rate)) - 1. For long-term planning, always consider real returns to understand actual purchasing power growth.
Can I use CAGR for business metrics like revenue?
Absolutely. CAGR is widely used in business to measure revenue growth, customer acquisition rates, market size expansion, and earnings growth. For example, if a company's revenue grew from $5 million to $20 million over 5 years, the revenue CAGR is 32%. Venture capitalists and analysts frequently use CAGR to evaluate business performance and project future growth.
What are the limitations of using CAGR?
CAGR has several limitations: it assumes smooth growth (hiding volatility and risk), does not account for additional investments or withdrawals during the period, ignores taxes and fees, only considers the beginning and ending values (ignoring what happened in between), and can be misleading if the chosen time period happens to start at a low point or end at a high point. Always use CAGR alongside other metrics like standard deviation and maximum drawdown for a complete picture.
How is CAGR different from IRR (Internal Rate of Return)?
CAGR only considers the beginning value, ending value, and time period. IRR (Internal Rate of Return) accounts for multiple cash flows at different times, making it more suitable for investments with periodic deposits, withdrawals, or irregular income. Use CAGR for simple growth analysis of a single lump sum, and IRR when there are multiple cash flows involved.
How accurate is this CAGR calculator?
This calculator uses the exact mathematical CAGR formula and produces results accurate to multiple decimal places. However, CAGR itself is a simplified model that assumes consistent compounding. Real-world investments experience volatility, taxes, fees, and varying contribution schedules. Use these results for planning and comparison purposes, not as guaranteed predictions of future returns.
What is the Rule of 72 and how does it relate to CAGR?
The Rule of 72 is a shortcut to estimate how long it takes for an investment to double at a given annual return rate. Simply divide 72 by the annual return percentage. At a CAGR of 6%, money doubles in about 12 years (72/6). At 12%, it doubles in about 6 years. The rule provides a quick mental estimate without needing a calculator and works well for rates between 2% and 20%.