CAGR Calculator: How to Calculate Compound Annual Growth Rate for Your Investments

When evaluating an investment, one of the most important metrics is the Compound Annual Growth Rate (CAGR). Unlike a simple percentage return, CAGR tells you the average annual rate of growth over a specific time period — smoothing out year-to-year volatility so you can compare different investments on equal footing. Use the CAGR Calculator to crunch the numbers instantly.

What Is CAGR?

CAGR is the mean annual growth rate of an investment over a specified time period longer than one year. It represents one of the most accurate ways to calculate and determine returns for anything that can rise or fall in value over time. The formula:

CAGR = (Ending Value / Beginning Value)^(1 / Number of Years) – 1

Real-World Examples

Example 1: Stock Investment

You invest $10,000 in a mutual fund. After 5 years, it’s worth $16,105.
CAGR = ($16,105 / $10,000)^(1/5) – 1 = 10% per year

Example 2: Business Revenue Growth

Your startup’s revenue grew from $500K (Year 1) to $2.5M (Year 4).
CAGR = ($2,500,000 / $500,000)^(1/3) – 1 = 71% per year

Example 3: Real Estate

A property purchased for $300,000 appreciates to $420,000 over 7 years.
CAGR = ($420,000 / $300,000)^(1/7) – 1 = 4.9% per year

Investment	Starting Value	Ending Value	Period	CAGR
S&P 500 Index Fund	$10,000	$18,114	6 years	10.4%
Small Business	$200,000 revenue	$500,000 revenue	3 years	35.7%
Bond Portfolio	$50,000	$62,500	5 years	4.6%

CAGR vs Average Return

CAGR is often confused with the arithmetic average return, but they are different. Consider an investment that goes: Year 1: +100% Year 2: -50%

The average return is (100% + (-50%)) / 2 = 25% — but your actual ending value? You broke even (0% total return). CAGR correctly shows 0%.

This is why CAGR is the preferred metric for comparing investment performance — it accounts for compounding and volatility. Use the CAGR Calculator to get the real picture.

When to Use CAGR

• Comparing funds: Which mutual fund performed better over 5 years?
• Business planning: What growth rate is your company achieving annually?
• Retirement planning: How much will your 401(k) grow at a given CAGR?
• Portfolio analysis: Smooth out year-to-year noise in your returns

Try the free CAGR Calculator to calculate your investment growth rate in seconds.