Finance

CAGR Calculator

Calculate compound annual growth rate, end value, start value, or number of years for any investment or business metric.

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CAGR Formulas

CAGR

CAGR = (End / Start)^(1/Years) − 1

End Value

End = Start × (1 + CAGR)^Years

Start Value

Start = End / (1 + CAGR)^Years

Years

Years = ln(End/Start) / ln(1 + CAGR)

What is CAGR and when should you use it?

CAGR is the standard way to express the annual growth rate of an investment, business revenue, or any metric that compounds over time. Because it accounts for compounding, a single CAGR figure accurately represents growth regardless of whether returns were steady or volatile year to year.

Investors use CAGR to compare mutual funds, ETFs, and individual stocks on an equal footing. Business analysts use it to evaluate revenue growth, customer acquisition, or market expansion. Whenever you need to express multi-year growth as a single annualized number, CAGR is the right metric.

Frequently asked questions

What is CAGR?
Compound Annual Growth Rate (CAGR) is the rate at which an investment would have grown from its starting value to its ending value if it had grown at a steady annual rate, with all profits reinvested each year. It smooths out volatility to give a single comparable growth rate.
How is CAGR calculated?
CAGR is calculated as: (End Value / Start Value) raised to the power of (1 / Years), minus 1. For example, an investment that grows from $10,000 to $20,000 over 7 years has a CAGR of (20,000/10,000)^(1/7) − 1 ≈ 10.4% per year.
What is a good CAGR for an investment?
A 'good' CAGR depends on the asset class and time horizon. Broad stock market indices have historically returned about 7–10% CAGR after inflation over long periods. Individual stocks, real estate, or businesses can exceed this, but often come with higher risk. Always compare CAGR against a relevant benchmark.
What is the difference between CAGR and average annual return?
CAGR is the geometric (compounded) growth rate that represents actual investor experience, while average annual return is an arithmetic mean that can be misleadingly high when returns are volatile. CAGR is generally the preferred metric for evaluating multi-year investment performance.
Can CAGR be negative?
Yes. A negative CAGR occurs when the end value is lower than the start value, meaning the investment lost money over the period. For example, an investment that shrinks from $10,000 to $6,000 over 5 years has a CAGR of approximately −9.5% per year.
What are the limitations of CAGR?
CAGR assumes constant growth and reinvestment of returns, which rarely reflects reality. It also ignores interim volatility, which matters greatly for investors who may need to liquidate during a downturn. Use CAGR alongside standard deviation and maximum drawdown for a complete picture of investment risk.

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