CAGR Calculator
Calculate compound annual growth rate, project future value, or find how long to reach your investment goal.
Parameters
What was my annual growth rate?
Compound Annual Growth Rate
$10,000 grew to $25,000 in 8 years
Total Return
150%
Total Gain
$15,000
How does your CAGR compare?
Growth Projection
12.14% CAGR compounded annually
What is CAGR?
CAGR stands for Compound Annual Growth Rate. It represents the rate at which an investment would have grown if it grew at a steady annual rate. Unlike simple average returns, CAGR accounts for the compounding effect, making it the most accurate way to compare investments over different time periods.
CAGR Formula
CAGR = (Ending Value / Beginning Value)^(1 / Years) − 1. For example, if an investment grew from $10,000 to $25,000 over 8 years, the CAGR is (25,000 / 10,000)^(1/8) − 1 = 12.13% per year. This single number represents the smoothed annual growth rate over the entire period.
CAGR vs Average Annual Return
Average annual return simply adds up yearly returns and divides by the number of years. CAGR uses the geometric mean, which accounts for the compounding effect. If an investment gains 50% in year one and loses 33% in year two, the average return is 8.5% — but the CAGR is 0%, because the investment is back where it started. CAGR tells the true story.