CAGR Calculator – Instantly Calculate Your Annualized Investment Growth

What is CAGR?

CAGR (Compound Annual Growth Rate) represents the smoothed annual growth rate of your investment, eliminating the noise from yearly ups and downs. Think of it as your portfolio’s "average speedometer" over the entire period.

Why CAGR Matters

• A $10,000 investment growing to $20,000 in 5 years has a CAGR of 14.87%, even if the annual returns fluctuated dramatically.
• Unlike simple total returns, CAGR allows fair comparisons between stocks, mutual funds, or business revenues across varying timeframes.

How to Use This CAGR Calculator

1. Enter your values:
• Initial investment (e.g., $10,000)
• Final value (e.g., $25,000)
• Investment duration in years (e.g., 7 years)
2. Get your CAGR percentage and view a growth chart instantly.

CAGR Formula & How to Calculate Manually

CAGR converts irregular investment growth into a consistent annual rate:

CAGR=(Final ValueInitial Value)1Years−1\text{CAGR} = \left(\frac{\text{Final Value}}{\text{Initial Value}}\right)^{\frac{1}{\text{Years}}} - 1CAGR=(Initial ValueFinal Value)Years1−1

Example:

• Initial Value = $5,000
• Final Value = $12,000
• Duration = 6 years

CAGR=(12,0005,000)16−1=15.10%\text{CAGR} = \left(\frac{12,000}{5,000}\right)^{\frac{1}{6}} - 1 = 15.10\%CAGR=(5,00012,000)61−1=15.10%

Excel shortcut:

=((FV/IV)^(1/n))-1

CAGR vs. Other Growth Metrics

Metric

Pros

Cons

Best Used For

CAGR

Smooths out volatility

Ignores cash flow timing

Multi-year performance comparison

AAGR

Shows yearly trends

Can overstate growth

Short-term trend analysis

Absolute

Simple dollar change

Misleading over long periods

Quick profit/loss overview

Real-World CAGR Examples

Case 1: Stocks vs. Mutual Funds

• Stock A: $8,000 → $22,000 in 10 years → 10.66% CAGR
• Fund B: $8,000 → $18,000 in 10 years → 8.45% CAGR

Key insight: Higher absolute returns don’t always mean a higher CAGR.

[Calculate Mutual Fund CAGR Here]

Case 2: Business Revenue Growth

A startup’s revenue grows from $200K in Year 1 to $1.2M in Year 5, with a CAGR of 43.09% — even if some years saw declines.

Limitations of CAGR

• Use CAGR carefully when:

• Investment volatility matters (e.g., a 50% loss followed by a 50% gain ≠ 0% CAGR)
• There are cash flows (deposits or withdrawals) during the period — XIRR is better here
• The time horizon is very short (1-2 years), as outliers can distort results

FAQ: Quick Answers

Q: Is CAGR the same as ROI?

A: No, ROI shows total return over time; CAGR annualizes that return.

Q: Can CAGR be negative?

A: Yes. For example, a drop from $10,000 to $7,000 over 3 years results in a -10.06% CAGR.

Q: What’s a good CAGR for stocks?

A: Historically, the market averages about 8-10% CAGR annually.

What is CAGR?

CAGR (Compound Annual Growth Rate) represents the smoothed annual growth rate of your investment, eliminating the noise from yearly ups and downs. Think of it as your portfolio’s "average speedometer" over the entire period.

Why CAGR Matters

• A $10,000 investment growing to $20,000 in 5 years has a CAGR of 14.87%, even if the annual returns fluctuated dramatically.
• Unlike simple total returns, CAGR allows fair comparisons between stocks, mutual funds, or business revenues across varying timeframes.

How to Use This CAGR Calculator

1. Enter your values:
• Initial investment (e.g., $10,000)
• Final value (e.g., $25,000)
• Investment duration in years (e.g., 7 years)
2. Get your CAGR percentage and view a growth chart instantly.

CAGR Formula & How to Calculate Manually

CAGR converts irregular investment growth into a consistent annual rate:

CAGR=(Final ValueInitial Value)1Years−1\text{CAGR} = \left(\frac{\text{Final Value}}{\text{Initial Value}}\right)^{\frac{1}{\text{Years}}} - 1CAGR=(Initial ValueFinal Value)Years1−1

Example:

• Initial Value = $5,000
• Final Value = $12,000
• Duration = 6 years

CAGR=(12,0005,000)16−1=15.10%\text{CAGR} = \left(\frac{12,000}{5,000}\right)^{\frac{1}{6}} - 1 = 15.10\%CAGR=(5,00012,000)61−1=15.10%

Excel shortcut:

=((FV/IV)^(1/n))-1

CAGR vs. Other Growth Metrics

Metric

Pros

Cons

Best Used For

CAGR

Smooths out volatility

Ignores cash flow timing

Multi-year performance comparison

AAGR

Shows yearly trends

Can overstate growth

Short-term trend analysis

Absolute

Simple dollar change

Misleading over long periods

Quick profit/loss overview

Real-World CAGR Examples

Case 1: Stocks vs. Mutual Funds

• Stock A: $8,000 → $22,000 in 10 years → 10.66% CAGR
• Fund B: $8,000 → $18,000 in 10 years → 8.45% CAGR

Key insight: Higher absolute returns don’t always mean a higher CAGR.

[Calculate Mutual Fund CAGR Here]

Case 2: Business Revenue Growth

A startup’s revenue grows from $200K in Year 1 to $1.2M in Year 5, with a CAGR of 43.09% — even if some years saw declines.

Limitations of CAGR

• Use CAGR carefully when:

• Investment volatility matters (e.g., a 50% loss followed by a 50% gain ≠ 0% CAGR)
• There are cash flows (deposits or withdrawals) during the period — XIRR is better here
• The time horizon is very short (1-2 years), as outliers can distort results

FAQ: Quick Answers

Q: Is CAGR the same as ROI?

A: No, ROI shows total return over time; CAGR annualizes that return.

Q: Can CAGR be negative?

A: Yes. For example, a drop from $10,000 to $7,000 over 3 years results in a -10.06% CAGR.

Q: What’s a good CAGR for stocks?

A: Historically, the market averages about 8-10% CAGR annually.

Disclaimer:

This website is provided on an "as is" basis without any guarantees or warranties of any kind, whether express or implied. The compound annual growth rate (CAGR) calculations presented are estimates and may not reflect actual market performance or future results. Users should consult with qualified financial advisors before making any investment decisions based on information from this site. We expressly disclaim all responsibility and liability for any damages, losses, or consequences arising from the use of, reliance upon, or reference to any content on this website. Your continued use of this site constitutes acceptance of these terms; if you do not agree, please discontinue use immediately.

Jay Deep is a digital marketer and market research expert who helps businesses grow with data-driven insights. He loves turning complex trends into clear, actionable strategies.