CAGR (Compound Annual Growth Rate) is the most widely used metric for measuring the smoothed annual return of an investment over multiple years. Unlike a simple average, CAGR accounts for compounding — the way each year's returns build on the previous year. This calculator computes CAGR from your beginning value, ending value, and number of years, then shows total return, growth multiple, and how many years it would take to double your money at that rate. Use it to evaluate stock returns, mutual fund performance, business revenue growth, or any quantity that grows over time.
Initial investment, revenue, or metric value
Final value at the end of the period
Year by year breakdown of your investment growth
| Year | Starting Balance | Contributions | Interest Earned | Ending Balance |
|---|---|---|---|---|
| Year | $0 | $0 | +$0 | $0 |
| Year | $0 | $0 | +$0 | $0 |
| Year | $0 | $0 | +$0 | $0 |
| Year | $0 | $0 | +$0 | $0 |
| Year | $0 | $0 | +$0 | $0 |
auto_awesome AI Tip: Starting early is the key to compound growth — even small amounts add up significantly over time
The starting amount — what you invested or the metric's initial value.
The final amount at the end of the time period.
How many years between the beginning and ending values (decimals OK, e.g. 2.5).
See the annualized growth rate, total return, growth multiple, and doubling time.
CAGR represents the constant annual rate at which the beginning value would have to grow to reach the ending value. It's a 'smoothed' rate — the actual yearly returns may have been more volatile, but CAGR tells you the equivalent steady growth rate. This makes it easy to compare investments with different time horizons and lumpy returns.
CAGR = (Ending Value / Beginning Value)^(1/years) − 1
CAGR smooths out volatility — actual yearly returns can be very different
Always compare CAGR over the same time period when evaluating investments
Rule of 72: divide 72 by CAGR% to estimate years to double your money
CAGR can be negative if the ending value is less than beginning value
CAGR doesn't tell you the riskiness — two investments with same CAGR can have very different volatility
For non-investment metrics (revenue, users), CAGR shows true growth pace independent of period length
CAGR is a geometric mean — it's always less than or equal to the arithmetic mean of yearly returns
Compound Annual Growth Rate, or CAGR, is the gold standard for comparing investment performance across different time periods. Unlike simple average returns, CAGR accounts for the compounding effect — where each year's gains build on the previous year's ending balance. This distinction matters enormously: a portfolio that gains 100% then loses 50% has a simple average return of 25% per year, but the actual CAGR is 0% because you end up right where you started. Financial analysts, portfolio managers, and individual investors use CAGR to evaluate mutual fund returns, compare stock performance, benchmark revenue growth, and set realistic financial goals. The S&P 500 has delivered a CAGR of roughly 10.5% over the past 50 years, a figure far more useful than any single-year return. This CAGR calculator takes your beginning value, ending value, and number of years, then computes the annualized growth rate, total return percentage, growth multiple, and the doubling time implied by that rate. Use it to analyze any metric that grows over time — investment portfolios, company revenue, GDP figures, or even website traffic.
CAGR captures the true compounded growth path, while simple averages can be misleading. Imagine a stock that returns +50% one year and −50% the next: simple average = 0%, but the stock has actually fallen from $100 to $75 — a CAGR of about −13.4%.
CAGR correctly reflects what happened to your money. This is why financial reports, fund prospectuses, and investment performance metrics almost always quote CAGR.
CAGR has two important limitations.
For investments with cash flows, IRR or MWRR are more appropriate. CAGR is best for comparing simple buy-and-hold returns over equal periods.
The CAGR formula is (Ending Value ÷ Beginning Value)^(1 ÷ Number of Years) − 1, expressed as a percentage.
If an investment grows from $10,000 to $16,000 over four years, CAGR = (16,000 ÷ 10,000)^(1/4) − 1 ≈ 12.5% per year.
CAGR smooths volatile year-to-year returns into a single constant growth rate, making it the cleanest way to describe how fast an investment compounded.
A simple average of yearly returns overstates real growth because it ignores compounding and the order of gains and losses.
An investment that drops 50% then gains 50% has a 0% simple average but a negative CAGR — you end with only 75% of your money.
CAGR reflects the actual compounded outcome, which is why it is the honest figure for reporting long-run performance.
CAGR assumes a single deposit at the start and a single value at the end, with no cash flows in between. IRR handles multiple deposits and withdrawals at different times.
Use CAGR for a buy-and-hold investment measured start to finish, and use our IRR calculator when money goes in or out along the way, such as ongoing contributions or dividends.
A good CAGR depends on the asset and risk taken. According to S&P Dow Jones Indices, the S&P 500 has compounded at roughly 10% per year long term (about 7% after inflation), so equities are often benchmarked there.
High-growth startups may target 30–50% revenue CAGR, while bonds and cash sit in the low single digits.
Always compare CAGR against a relevant benchmark and the volatility endured to achieve it.
Beyond investments, CAGR is the standard metric for revenue, user, and earnings growth in business and startup analysis.
Reporting that revenue grew at a 38% CAGR over five years is far more meaningful than a raw total, because it normalizes growth into a comparable annual rate.
Investors and boards use revenue CAGR to compare companies of different sizes and time horizons.
The Rule of 72 is a fast mental shortcut tied to CAGR: divide 72 by your CAGR to estimate how many years it takes to double your money.
A 9% CAGR doubles capital in about eight years (72 ÷ 9).
It is an approximation, but it makes the power of a given growth rate intuitive without a calculator.
CAGR is highly sensitive to the start and end dates you choose. Measuring from a market bottom flatters the rate, while including a crash at the end depresses it — a tactic sometimes used to cherry-pick favorable numbers.
To judge an investment fairly, calculate CAGR over several periods (3, 5, and 10 years) rather than one carefully chosen window.
You can rearrange the CAGR formula to find the growth rate needed to reach a goal: required CAGR = (Target ÷ Current)^(1 ÷ Years) − 1.
To turn $50,000 into $100,000 in ten years you need about a 7.2% CAGR.
This reverse calculation is useful for retirement and savings planning, showing whether your target return is realistic for the risk you can take.
The most frequent errors are:
CAGR also hides volatility — two investments with the same CAGR can have wildly different risk. Pair CAGR with a volatility or drawdown measure for a complete picture, and never use it when cash flows occur mid-period.
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All formulas verified against official standards.