CAGR Calculator

Calculate compound annual growth rate for any investment or business metric.

Start Value ($)

End Value ($)

Number of Years

CAGR

+14.87%

per year, compounded annually

Total Return

+100.00%

Growth Amount

+$10,000

Year-by-Year Breakdown

Period	Value	Growth	Cumul. Return
Start	$10,000	—	—
Year 1	$11,487	+$1,487	+14.87%
Year 2	$13,195	+$1,708	+31.95%
Year 3	$15,157	+$1,962	+51.57%
Year 4	$17,411	+$2,254	+74.11%
Year 5	$20,000	+$2,589	+100.00%

What Is CAGR?

CAGR — Compound Annual Growth Rate — is a single number that describes how fast something grew per year over a multi-year period. It answers the question: if an investment or business metric had grown at a perfectly smooth, identical rate every single year, what would that rate have been?

In reality, investments rarely grow at the same rate each year. A stock might return +30% in year one, −15% in year two, and +22% in year three. CAGR ignores those individual years and instead looks only at where you started and where you ended — then back-calculates the steady annual rate that would have produced the same outcome.

This makes CAGR useful for comparing performance across different investments or time periods without year-to-year noise obscuring the big picture. If Fund A turned $10,000 into $18,000 over six years and Fund B turned $10,000 into $16,000 over the same period, Fund A's CAGR is 10.3% versus Fund B's 8.1% — a clean, direct comparison regardless of when each fund had its best or worst years.

CAGR applies to anything that grows or shrinks over time: stock prices, mutual fund NAVs, revenue, earnings per share, home values, the number of customers on a platform, CO₂ concentrations, population — any quantity measured at two points in time with a duration between them.

The term was popularized in business reporting during the 1990s as a standardized way to communicate growth rates in investor presentations and analyst reports. Today it is a foundational metric in finance, market research, and competitive analysis across every industry.

The CAGR Formula Explained

The formula for CAGR is:

CAGR = (End Value ÷ Start Value)^(1 ÷ Years) − 1

Breaking that down step by step:

Divide the end value by the start value. This gives you the total growth multiple. Going from $5,000 to $10,000 gives a multiple of 2.0×. Going from $10,000 to $8,000 gives 0.8×.
Raise that multiple to the power of 1 ÷ years. This is the de-compounding step. It breaks the total multi-year growth into an equal-per-year rate. For 5 years you raise to 1/5 = 0.2; for 10 years, 1/10 = 0.1.
Subtract 1. This converts the growth multiplier (e.g., 1.1487) into a growth rate (e.g., 0.1487 = 14.87%).

Worked example: You invested $8,000 in an index fund. Seven years later it is worth $16,500.

CAGR = (16,500 ÷ 8,000)^(1 ÷ 7) − 1
     = 2.0625^0.1429 − 1
     = 1.1094 − 1
     = 10.94% per year

Verification: $8,000 × 1.1094^7 = $8,000 × 2.0625 = $16,500. ✓

Note that this formula works for any starting and ending values as long as both are positive. If the ending value is less than the starting value, CAGR will be negative, correctly indicating a decline.

Three Ways to Use This Calculator

This CAGR calculator has three modes, each solving for a different unknown variable in the same underlying equation:

Find CAGR — backward-looking analysis

Enter your starting value, ending value, and the number of years between them. The calculator returns the annualized growth rate. Use this to analyze how fast an investment, business metric, or asset grew in the past. This is the most common use: you have historical data and want to summarize the annual growth rate in a single number.

Find End Value — forward-looking projection

Enter your starting value, a target CAGR, and the number of years. The calculator returns the projected ending value. Use this to model scenarios: "If my portfolio grows at the market's historical 10% per year for 20 years, what will it be worth?" or "If our company revenue grows at 25% annually for 5 years, where will we be?"

Find Years — goal timing

Enter your starting value, target ending value, and expected annual growth rate. The calculator returns the number of years needed. Use this to answer time-to-goal questions: "How long does it take to double my investment at 8% per year?" or "How many years at 15% CAGR to grow revenue from $1M to $5M?"

CAGR vs. Average Annual Return — Why They Differ

CAGR (the geometric mean return) and the arithmetic mean return (simple average of annual returns) can produce very different numbers for the same investment, and understanding why matters when evaluating performance claims.

The arithmetic mean simply adds up the percentage returns for each year and divides by the number of years. It treats each year's return as independent. The geometric mean (CAGR) multiplies the return factors together and takes the nth root — it correctly accounts for the compounding effect across years.

A stark example where they diverge: an investment returns +100% in Year 1 and −50% in Year 2.

Arithmetic mean: (100% + (−50%)) ÷ 2 = +25% per year — sounds like a profitable investment.
CAGR: You started with $1,000, doubled to $2,000, then halved back to $1,000. CAGR = (1,000/1,000)^(1/2) − 1 = 0% per year — you made nothing.

The gap between arithmetic mean and CAGR is called volatility drag(or variance drain). The more volatile an investment's year-to-year returns, the larger the gap between its arithmetic mean return and its CAGR. A volatile fund might advertise a 12% arithmetic mean return while its actual CAGR is only 9%.

The arithmetic mean is always greater than or equal to the geometric mean — it can never be lower. This is why some fund marketing materials cite arithmetic mean returns: they are always a more flattering number. When comparing investments, use CAGR. It is the number that tells you how much your money actually grew.

For index funds with relatively smooth returns (like broad market ETFs), the gap between arithmetic mean and CAGR is small — perhaps 1–2 percentage points. For highly volatile assets like individual small-cap stocks or cryptocurrency, the gap can be enormous.

CAGR vs. Compound Interest

Compound interest and CAGR use identical mathematics but point in opposite directions. Understanding the relationship helps you choose the right tool.

Compound interest is forward-looking: you know the starting amount (PV) and the annual rate (r), and you want to find the ending amount after n years. The formula is FV = PV × (1 + r)^n.

CAGR is backward-looking: you know the starting and ending amounts, and you want to find the implied annual rate. The CAGR formula solves the compound interest equation for r: CAGR = (FV / PV)^(1/n) − 1.

You use a compound interest calculator when planning for the future: "I have $20,000 today and expect 7% annual returns. What will it be worth in 30 years?" You use a CAGR calculator when evaluating the past: "My portfolio grew from $20,000 to $95,000 over 20 years. What was my annual return?"

One important difference: the "Find End Value" mode of this CAGR calculator and a compound interest calculator are mathematically identical — both compute FV = PV × (1 + r)^n. Compound interest calculators often add features like regular contributions, variable compounding periods (daily, monthly), and inflation adjustments that a CAGR tool typically does not. If you are modeling future growth with regular deposits, use a dedicated compound interest calculator for the most accurate projection.

What Is a Good CAGR?

Benchmarks vary by asset class, time horizon, and risk level. Here are the key reference points:

US stock market (S&P 500): approximately 10–11% CAGR in nominal terms over the past century, or 7–8% after inflation. This is the gold standard benchmark for passive equity investing. Any individual stock or active fund you evaluate should be compared against this baseline on an after-fee, after-tax basis.

US residential real estate (home prices): approximately 4–6% CAGR in nominal terms over the long run, or 1–3% after inflation. This is lower than equities in pure appreciation terms, but real estate investors typically employ leverage (a mortgage) that amplifies returns on equity. Rental income adds another layer not captured in price CAGR alone.

US Treasuries (10-year bond): average nominal CAGR of approximately 2–5% depending on the era, with much higher returns during the high-rate 1980s. Bonds provide lower expected returns than equities but substantially lower volatility — the trade-off at the core of portfolio construction.

Individual stocks: a 5-year CAGR above 15% is considered strong for a single company. Above 20% over 10+ years is exceptional and difficult to sustain — the performance territory associated with a small number of elite investors. The vast majority of actively managed mutual funds underperform the S&P 500's CAGR over 10+ years once fees are included.

Business revenue: for early-stage startups, 3× annual growth (200% CAGR) in the first few years is considered minimum viable traction by many venture investors. High-growth public SaaS companies are often valued at premium multiples when their revenue CAGR exceeds 20–30%. A mature, profitable company sustaining 10–15% revenue CAGR is considered a strong compounder. Below 5% revenue CAGR in a growing economy often signals market share loss or structural decline.

CAGR in Business and Financial Analysis

Beyond investment returns, CAGR is one of the most widely reported metrics in corporate financial analysis, market research, and investor communications. Here is where you will routinely encounter it:

Earnings per share (EPS) growth: when analysts evaluate whether a company is improving its profitability, they examine 3-year and 5-year EPS CAGR. A company growing EPS at 10%+ per year is generally attracting investor interest. When EPS CAGR exceeds revenue CAGR, it suggests expanding profit margins — a positive signal. When revenue grows faster than EPS, margin compression may be occurring.

Dividend growth:income investors track dividend CAGR as a measure of a company's commitment to returning cash to shareholders. The S&P 500's dividend CAGR has historically averaged around 5–6% per year. A stock known as a "dividend growth stock" — such as those in the Dividend Aristocrats or Dividend Kings lists — typically sustains dividend CAGR of 5–10% or more for a decade or longer. Dividend CAGR signals financial health and management confidence in future earnings.

Market size projections:market research firms routinely express industry growth forecasts as CAGRs. For example: "the global electric vehicle battery market is projected to grow at a CAGR of 18% through 2030." These projections are useful for strategic planning but should be treated with appropriate skepticism — actual growth rarely follows a smooth curve, and market research projections from commercial firms often have an incentive toward optimism.

Startup pitch decks:founders routinely cite revenue CAGR or monthly active user growth to demonstrate momentum to investors. A SaaS company with a three-year revenue CAGR above 100% is typically in "hypergrowth" territory and commands premium venture valuations. Investors scrutinize CAGR alongside retention metrics (churn, NRR) to distinguish real compounding growth from growth that requires unsustainably high customer acquisition spend.

Personal finance comparisons:CAGR is the correct metric for comparing your investment accounts against each other and against benchmarks. Your 401(k)'s all-time CAGR tells you more than any single year's return. Comparing your portfolio's CAGR to the S&P 500's CAGR over the same holding period tells you definitively whether active selection added or destroyed value.

Three Real-World Worked Examples

Example 1 — Stock Investment Return

You bought shares of a technology company for a total cost of $15,000 in January 2019. By January 2026 — seven years later — those shares are worth $35,000.

CAGR = (35,000 / 15,000)^(1/7) − 1
= 2.3333^0.1429 − 1
= 12.84% per year

Your investment outperformed the S&P 500's historical average of 10–11% annually. Total return: +133.3%. Year-by-year, the table would show steady growth from $15,000 at year 0 to $35,000 at year 7.

Example 2 — Business Revenue Growth

A software company had $2.5 million in annual recurring revenue (ARR) in 2020 and $7.8 million in ARR in 2025 — a five-year span.

CAGR = (7,800,000 / 2,500,000)^(1/5) − 1
= 3.12^0.2 − 1
= 25.54% per year

This is considered strong sustainable growth for a software business — enough to attract Series B or later-stage venture funding. A revenue CAGR consistently above 20% over five or more years earns the "compounder" label from growth investors.

Example 3 — Time to Double Using Find Years Mode

At a 7% annual CAGR (roughly the inflation-adjusted historical return of the S&P 500), how long does it take to double a $25,000 investment?

Years = ln(50,000 / 25,000) / ln(1.07)
     = ln(2) / ln(1.07)
     = 0.6931 / 0.0677
     = 10.24 years

This aligns with the Rule of 72: divide 72 by the growth rate (72 ÷ 7 ≈ 10.3 years) — a quick mental-math shortcut that gives a close approximation. Use the "Find Years" mode on this calculator for the precise answer.

Limitations of CAGR You Should Know

CAGR is powerful and widely used, but it has real limitations that can mislead you if you rely on it exclusively:

It ignores the path between start and end. Two investments with identical CAGRs over the same period can have radically different volatility profiles — one might have grown steadily, while the other crashed 60% mid-way before recovering to the same endpoint. Most investors care deeply about drawdowns, and CAGR is completely blind to them. Standard deviation, Sharpe ratio, and maximum drawdown are complementary metrics that fill this gap.

It is sensitive to the choice of start and end dates. Measuring CAGR from a market peak produces pessimistic results; measuring from a trough produces optimistic ones. A fund that launched just before a crash and is measured just before a boom will show a misleadingly high CAGR. Always consider whether your chosen measurement window is representative of normal operating conditions.

It doesn't account for cash flows during the period. If you added money to an investment over time (as in a dollar-cost averaging strategy), the CAGR calculated from your initial investment to your current total does not correctly represent your personal rate of return. The Internal Rate of Return (IRR), also called the money-weighted rate of return, properly accounts for the timing and size of cash flows in and out of an investment.

It does not adjust for inflation or fees. A nominal CAGR of 10% with 3% inflation yields a real CAGR of roughly (1.10/1.03) − 1 ≈ 6.8%. Fund management fees, brokerage commissions, and taxes further reduce realized returns. When comparing your investment CAGR to historical market data, confirm you are comparing on the same basis — nominal vs. real, pre-fee vs. post-fee — or the comparison will be meaningless.

It cannot handle zero or negative values.The CAGR formula requires both the start and end values to be positive. If a company's earnings went from positive to negative (or vice versa), CAGR cannot express that change meaningfully. In those cases, analysts use absolute dollar figures or note that the metric is "not meaningful" (NM).

Frequently Asked Questions

What is CAGR?

CAGR stands for Compound Annual Growth Rate. It is the rate at which an investment or metric would have grown each year if it had grown at a steady rate, compounding each year, to reach the ending value from the starting value over the measurement period. CAGR is a smoothed annual growth rate — it does not reflect actual year-to-year fluctuations, only the hypothetical constant rate that would connect the start and end points. For example, if an investment grew from $10,000 to $20,000 over five years, its CAGR is approximately 14.87% per year. That means $10,000 growing at 14.87% per year, compounded annually, equals $20,000 after five years.

How do I calculate CAGR?

The CAGR formula is: CAGR = (End Value / Start Value)^(1 / Years) − 1. To use it: divide the ending value by the starting value, raise the result to the power of 1 divided by the number of years, then subtract 1. Multiply by 100 to convert to a percentage. Example: an investment grew from $5,000 to $9,000 over 6 years. CAGR = (9,000 / 5,000)^(1/6) − 1 = 1.8^0.1667 − 1 = 1.1026 − 1 = 10.26% per year.

What is the difference between CAGR and average annual return?

CAGR and average annual return (also called arithmetic mean return) give different answers and measure different things. The arithmetic mean adds up all annual returns and divides by the number of years. If an investment returned +50% in year 1 and −50% in year 2, the arithmetic mean is 0% — but your actual ending value is only $75,000 from a $100,000 start ($100,000 × 1.5 × 0.5 = $75,000). CAGR for that same investment would be (75,000/100,000)^(1/2) − 1 = −13.4%, which correctly represents that you lost money. CAGR is more accurate for measuring actual investment outcomes because it accounts for compounding. The arithmetic mean always equals or exceeds the CAGR, so marketing materials sometimes use the higher arithmetic mean — CAGR is the honest number.

What is a good CAGR for a stock investment?

The S&P 500 has delivered a CAGR of approximately 10–11% per year in nominal terms over long historical periods (roughly 7–8% after inflation). A stock investment with a 10-year CAGR above 15% is generally considered strong. Warren Buffett's Berkshire Hathaway delivered a CAGR of about 19–20% per year from 1965 through 2023, which is considered exceptional and difficult to replicate. For individual stocks, a CAGR above 20% over 5+ years is excellent. For business revenue, a consistent CAGR of 20–30%+ is what distinguishes high-growth companies. Keep in mind that higher CAGR usually comes with higher volatility and risk.

Can CAGR be negative?

Yes, CAGR can be negative whenever the ending value is lower than the starting value. A negative CAGR means the investment or metric declined over the period. For example, if a business had revenue of $2,000,000 in 2019 and $1,500,000 in 2024 (five years later), the CAGR would be (1,500,000/2,000,000)^(1/5) − 1 = −5.63% per year. This indicates the company's revenue contracted at an annualized rate of 5.63% over those five years. Negative CAGR calculations require that both the start and end values are positive — the formula is undefined for zero or negative values.

How is CAGR different from compound interest?

The two concepts use the same underlying math but serve opposite purposes. Compound interest is forward-looking: you know the rate and want to find the future value. CAGR is backward-looking: you know the start and end values and want to find the implied rate. The formula for future value with compound interest is FV = PV × (1 + r)^n, solving for FV. The CAGR formula solves the same equation for r: CAGR = (FV / PV)^(1/n) − 1. You use compound interest to project what an investment will be worth. You use CAGR to measure how fast something actually grew.

What is CAGR used for in business?

In business and finance, CAGR is used to measure and compare the growth of revenue, earnings per share (EPS), dividends, market share, customer base, or any other business metric over time. Analysts use it to evaluate whether a company's growth is accelerating or slowing, and to compare growth rates across companies of different sizes. Venture capital investors use CAGR to measure portfolio performance. Market research firms use CAGR to describe projected industry growth rates (for example, 'the market is expected to grow at a CAGR of 12% through 2030'). In investor presentations, CAGR is often cited because it provides a single, easy-to-understand annual rate that summarizes multi-year growth.