The CAGR (Compound Annual Growth Rate) calculator measures the steady annual growth rate of an investment, business metric, or portfolio over a multi-year period. It's the standard way to compare performance across investments with different time horizons.
How to Use This Calculator
- Enter the starting value (initial investment, revenue, or metric).
- Enter the ending value at the end of the period.
- Enter the number of years in the period.
- Click Calculate to see CAGR and projected value at any future year.
What This Calculator Measures
- CAGR — The rate at which an investment would have grown if it compounded at the same rate each year.
- Starting value — The initial value at the beginning of the measurement period.
- Ending value — The final value after the full period.
- Growth multiple — How many times larger the ending value is compared to the start.
Formula or Logic
CAGR = [(Ending Value ÷ Starting Value)^(1 ÷ Number of Years)] − 1
Expressed as a percentage: CAGR% = CAGR × 100
CAGR smooths out volatility to give a single representative growth rate — it does not reflect what happened in individual years.
Example Calculations
Example 1: Portfolio grew from $10,000 to $18,000 in 5 years. CAGR = (18,000/10,000)^(1/5) − 1 = 12.47%.
Example 2: Company revenue grew from $2M to $8M in 6 years. CAGR = (8/2)^(1/6) − 1 = 26.0%.
Understanding Your Results
The S&P 500 has delivered a historical CAGR of approximately 10% before inflation. A CAGR above 15% for a portfolio is exceptional. For businesses, a CAGR above 20% is considered high growth.
Common Mistakes to Avoid
- Treating CAGR as a guaranteed future return — it describes the past only.
- Confusing simple average annual return with CAGR (they give very different results with volatile data).
- Using CAGR over very short periods (1–2 years) where a single event distorts the picture.
- Failing to adjust for inflation when comparing real vs. nominal returns.