CAGR Calculator
Compound Annual Growth Rate for investments, portfolios, and business metrics
CAGR (Compound Annual Growth Rate) is the single annualized rate that smooths out volatility and shows the true compounded growth of an investment, portfolio, or business metric from a beginning value to an ending value. A $10,000 investment that grows to $21,436 over 8 years has a CAGR of 10% — even though the actual year-to-year returns varied. This calculator solves the exact CAGR formula and projects the value forward year by year at that rate.
How CAGR Is Calculated
CAGR answers one question: "What constant annual growth rate, compounded every year, turns my beginning value into my ending value?" It's a geometric average, not a simple average, which is why it's the standard way analysts, fund managers, and business owners compare growth across different time periods and volatile assets.
| Variable | Definition |
|---|---|
| EV | Ending value — the final value of the investment or metric |
| BV | Beginning value — the starting value of the investment or metric |
| n | Number of years in the holding period |
Worked example: an investment starts at $10,000 and grows to $21,436 after 8 years. CAGR = (21,436 ÷ 10,000)^(1/8) − 1 = (2.1436)^0.125 − 1 ≈ 0.10, or 10%. That means the investment behaved, on a compounded basis, as if it grew exactly 10% every single year — even if real returns bounced between −15% and +30% along the way.
💡 Expert Pro-Tip
CAGR Hides Volatility — Always Check the Path, Not Just the Endpoints: Two investments can have identical CAGRs with wildly different risk profiles. A fund that returns a steady 8% every year has the same 8% CAGR as one that drops 40% in year one and rockets up 80% in year two. If you're evaluating a real investment (not just a textbook example), pair CAGR with a look at maximum drawdown and year-by-year volatility — the smoothed number can mask a bumpy, hard-to-stomach ride that would have caused most investors to sell at the worst possible time.
CAGR Calculator FAQ
What is CAGR used for?
CAGR is used to compare the historical performance of investments, mutual funds, stock portfolios, or business metrics (like revenue or user growth) over different time periods on an apples-to-apples basis. Because it smooths out year-to-year swings into one number, it's the standard metric in fund fact sheets, pitch decks, and annual reports.
Is CAGR the same as average annual return?
No — and this is the most common mix-up. A simple (arithmetic) average adds up each year's return and divides by the number of years, which overstates true growth when returns are volatile. Example: a $100 investment that goes −50% then +100% ends at $100 (0% actual growth, 0% CAGR), but the arithmetic average of −50% and +100% is +25%. CAGR always reconciles exactly with the beginning and ending values; a simple average often does not.
What's a good CAGR?
It depends entirely on the asset class and risk level. The S&P 500's long-run historical CAGR is roughly 10% before inflation (~7% after). High-yield savings and CDs in 2026 run 4–5% CAGR with no risk. Early-stage businesses or growth stocks are often judged against a 15–25%+ CAGR bar to compensate investors for the added risk. There's no universal "good" number — compare your CAGR to a relevant benchmark over the same period.
Can CAGR be negative?
Yes. If the ending value is lower than the beginning value, CAGR will be negative, showing the annualized rate of decline. This is common for depreciating assets, struggling businesses, or investments held through a prolonged downturn.
Does CAGR account for additional contributions?
No — standard CAGR only compares a single beginning value to a single ending value over time. If you're adding regular contributions (like monthly investing), use the compound interest calculator instead, which models both a starting balance and ongoing contributions.
CAGR Calculator
Inputs
Results
Based on your results — what to do next:
Project this growth rate forward
10.10% CAGR — model what happens if you keep adding regular contributions on top of this growth rate.
Compare to a DCA strategy
A single lump sum growing at 10.10% vs. investing the same total gradually over time — see which wins.
See the full return picture
Total return of 115.89% over 8 years — factor in cash flows and fees for a complete ROI analysis.