CAGR Calculator (Compound Annual Growth Rate)
Calculate the Compound Annual Growth Rate (CAGR) of an investment.
Find how fast an investment grew on an annualized basis, or project future value.
What Is CAGR?
The Compound Annual Growth Rate (CAGR) is the rate at which an investment would have grown if it grew at the same rate every year — compounded annually. It smooths out the volatility of year-to-year returns into a single, comparable percentage.
The CAGR Formula
CAGR = (Ending Value / Beginning Value)^(1 / Number of Years) − 1
To find the future (ending) value when you know the CAGR:
Ending Value = Beginning Value × (1 + CAGR)^Years
CAGR vs. Average Annual Return
These are not the same! If a stock gains 100% one year and loses 50% the next, the average return is 25% — but you have the same money you started with (CAGR = 0%). CAGR always reflects what actually happened to your money.
The Rule of 72
A quick way to estimate how long it takes to double your money:
Years to Double ≈ 72 / CAGR (%)
At a 9% CAGR, your money doubles in approximately 8 years. At 12%, about 6 years.
Worked Example
A portfolio grew from $25,000 to $68,000 over 9 years:
CAGR = ($68,000 / $25,000)^(1/9) − 1 = 11.77%
This means the portfolio grew at the equivalent of 11.77% per year, compounding.
CAGR Benchmarks
| CAGR Range | Classification |
|---|---|
| Below 5% | Modest — below inflation-adjusted S&P returns |
| 5% – 10% | Solid — in line with broad market indices |
| 10% – 15% | Strong — beats most passive investors |
| 15% – 20% | Excellent — very few funds sustain this |
| Above 20% | Exceptional — rare and often not sustainable |
For reference, the S&P 500 has averaged roughly 10.5% CAGR over the long run (pre-inflation). Inflation averages around 3%, making the real CAGR about 7.5%.
Limitations
CAGR does not show the path — two investments with the same CAGR can have wildly different risk profiles. One may have been smooth; the other may have crashed 70% mid-way. Always pair CAGR with volatility measures like standard deviation.