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CAGR Calculator (Compound Annual Growth Rate)

Enter starting value, ending value, and the holding period in years. The calculator returns CAGR (the annualized rate that would have produced the same end result), total return percent, value multiplier, and absolute gain.

CAGR (annualized)
+12.47%
Total return
+80%
Multiplier
1.8×
Absolute gain
+8,000

Value at the computed CAGR

Value at the computed CAGR5,00010,00015,00020,0000123450 — Value at the computed CAGR: 10,0001 — Value at the computed CAGR: 11,2472 — Value at the computed CAGR: 12,6513 — Value at the computed CAGR: 14,2294 — Value at the computed CAGR: 16,0045 — Value at the computed CAGR: 18,000

The line assumes perfectly steady growth at the computed CAGR — real returns fluctuate around it from year to year.

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How it works

What CAGR is and why it matters

CAGR (Compound Annual Growth Rate) smooths an investment's actual ups and downs into the constant annual rate that would have produced the same end result. Formula: CAGR = (end / start)^(1/years) − 1.

It answers: 'if this had grown at a steady rate, what rate?'. Useful for comparing investments held for different periods, since raw 'total return' over 5 years isn't directly comparable to 3 years.

CAGR vs total return vs IRR

Total return: simple end / start − 1. Doesn't normalize for time. A 50% total return over 1 year is amazing; over 30 years it's mediocre.

CAGR: time-normalized. The 30-year 50% return is just 1.4% CAGR. Direct apples-to-apples between any holding periods.

IRR (Internal Rate of Return): handles irregular cash flows (multiple deposits, dividends, partial withdrawals). For simple buy-and-hold, IRR ≈ CAGR. For complex flows, use a spreadsheet's IRR() function.

Common CAGR benchmarks

S&P 500 long-term: ~10% nominal, ~7% real (after inflation). Use 7% for purchasing-power planning.

US 10-year Treasury: ~4-5% recent nominal CAGR.

Real estate: 5-8% CAGR price appreciation, plus rental yield separately.

Inflation: 2-3% in stable economies. Anything below this is real-terms loss.

Formula and sources

CAGR = (final value ÷ initial value)^(1 ÷ years) − 1. It answers one question: at what constant annual rate would the investment have had to grow to get from the start value to the end value? The chart draws exactly that smoothed path.

The definition follows Investopedia's reference article on compound annual growth rate (see Sources). CAGR deliberately hides volatility — two investments with identical CAGR can carry very different risk — so pair it with drawdown or volatility measures.

Frequently asked questions

›What's the difference between CAGR and average annual return?

Arithmetic mean of yearly returns ignores compounding and is misleading. -50% then +50% has 0% mean but only 0.75x final value (-25% total). CAGR captures the actual compounded result.

›Can CAGR be negative?

Yes — if your end value is less than start. -10% CAGR over 5 years means 0.9^5 ≈ 0.59x of start, a 41% total loss.

›Should I use real or nominal values?

Depends on the question. 'How much did my money grow?' use nominal. 'How much did my purchasing power grow?' subtract inflation from CAGR or use inflation-adjusted values.

›Why does my actual return feel worse than CAGR?

CAGR smooths volatility. Two stocks with same CAGR can have wildly different paths — one steady 7%, another with 50% drawdowns. Drawdowns hurt psychologically even if CAGR is identical.

›What's a 'good' CAGR?

Beating inflation (2-3%) is the floor. Matching S&P 500 (7-10%) is solid. Matching it consistently after fees and taxes is harder than it sounds.

›How does CAGR compare to the rule of 72?

Rule of 72 is the inverse use case: 'at this CAGR, how long to double?' = 72 / CAGR. So 10% CAGR doubles in ~7.2 years.

›Does this work for shrinking businesses?

Yes — negative CAGR works mathematically. Used in business analysis to quantify decline rates.

›Does the data leave my browser?

No. Calculation runs locally; nothing is sent to a server.

Sources & methodology

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This tool provides general information and estimates only — it is not financial, investment, tax, or legal advice. Verify important figures with a qualified professional before making decisions.

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