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CAGR Calculator – Compound Annual Growth Rate Calculator

CAGR Calculator

Enter initial value, final value, and number of years, then click "Calculate CAGR".

Example: $10,000 → $21,589 in 10 years → 8% CAGR, 115.89% total return

The CAGR Calculator (Compound Annual Growth Rate) measures the annualized return of an investment over a specific period. Unlike simple average returns, CAGR accounts for compounding and smooths out volatility, giving you a true picture of investment performance. Whether you are evaluating stocks, mutual funds, real estate, or a business, this CAGR return calculator helps you compare investments with different time horizons. It works with any currency – just select yours from the dropdown.

CAGR Formula & Calculation

CAGR = (Ending Value / Beginning Value)^(1/years) − 1

Multiply by 100 to get percentage.

For example, an investment that grows from $10,000 to $21,589 in 10 years has a CAGR of 8%. This means the investment grew as if it earned exactly 8% every year, compounded annually. The total return over 10 years is 115.89%. CAGR is the best metric for comparing returns across different time periods.

Applications

  • Stock portfolio evaluation: Compare your stock returns with market indices (e.g., S&P 500).
  • Mutual fund selection: Compare CAGR of different funds over 3, 5, or 10 years.
  • Business growth: Calculate revenue or profit CAGR for investors.
  • Real estate: Measure property appreciation annualized.
CAGR vs. Average Return – Why It Matters

Consider an investment that returns +50% in year one and -30% in year two. The average return is 10% per year, but the actual CAGR is only 2.5%! CAGR reflects the true geometric mean, accounting for volatility. Always use CAGR for performance comparisons.

CAGR assumes steady growth, which is rarely true in reality, but it's the standard for annualized performance reporting.

Investment Growth & CAGR Target Reference Table

Initial Capital5-Year Growth (CAGR)10-Year Growth (CAGR)15-Year Growth (CAGR)
$10,000$16,105 (10.0%)$25,937 (10.0%)$41,772 (10.0%)
$10,000$17,623 (12.0%)$31,058 (12.0%)$54,736 (12.0%)
$10,000$20,114 (15.0%)$40,456 (15.0%)$81,371 (15.0%)
$50,000$80,526 (10.0%)$129,687 (10.0%)$208,862 (10.0%)
$100,000$201,136 (15.0%)$404,556 (15.0%)$813,706 (15.0%)

How to Interpret CAGR Values

  • 8-10% CAGR: Good long-term equity returns (historical S&P 500 ~10%).
  • 12-15% CAGR: Excellent returns, often from high-growth stocks or emerging markets.
  • 4-6% CAGR: Typical for bonds, FDs, or conservative portfolios.
  • Negative CAGR: Investment lost value over the period.

Using CAGR to Compare Investments

CAGR normalizes returns across different time periods. A fund that grew 50% in 3 years has a CAGR of ~14.5%, while another that grew 100% in 7 years has a CAGR of ~10.4%. The first fund performed better annually despite lower total return. Use CAGR to make apples-to-apples comparisons.

Common Mistakes When Using CAGR

  • Ignoring cash flows: CAGR assumes no additional investments or withdrawals – use IRR for cash flows.
  • Short time periods: CAGR over 1-2 years can be misleading due to volatility.
  • Not considering risk: Two investments with same CAGR can have very different risk profiles.
  • Forgetting inflation: Adjust for inflation to get real CAGR.

Real-World CAGR Examples

  • S&P 500 (1926-2023): ~10% CAGR
  • Bitcoin (2011-2021): ~200% CAGR (extremely volatile)
  • Gold (1971-2023): ~7.5% CAGR
  • Indian Sensex (1979-2023): ~14% CAGR

Use this CAGR calculator to evaluate any investment's annualized return. Bookmark it to compare stocks, mutual funds, or your own portfolio's performance over time.

Step‑by‑Step Manual Example

Investment: $10,000 → $21,589 in 10 years

Step 1: Ratio = 21,589 / 10,000 = 2.1589

Step 2: Raise to power (1/10) = 2.1589^(0.1) = 1.08

Step 3: Subtract 1 → 1.08 − 1 = 0.08

Step 4: Multiply by 100 → 8% CAGR

Frequently Asked Questions about CAGR

What is CAGR?
CAGR (Compound Annual Growth Rate) is the mean annual growth rate of an investment over a specified period of time longer than one year. It smooths out volatility and represents the geometric mean return.
How is CAGR calculated?
The CAGR formula is: CAGR = (Final Value / Initial Value)^(1 / Years) - 1. Multiply the result by 100 to get a percentage.
How is CAGR different from average annual return?
Average annual return simple arithmetic mean ignores compounding and overstates returns during high volatility. CAGR incorporates annual compounding, providing the true geometric rate of return.
Can CAGR be negative?
Yes, if the final value is less than the starting initial investment, the resulting CAGR will be negative, indicating an annualized loss.
Is CAGR the same as annualized return?
Yes, CAGR is identical to the annualized rate of return for an investment held over multiple years without periodic additions or withdrawals.
What is a good CAGR for stocks or mutual funds?
Historically, broad equity indices like the S&P 500 yield an 8% to 10% long-term CAGR. A CAGR of 12% to 15% is considered excellent for actively managed equity funds.
What is the difference between CAGR and IRR?
CAGR assumes a single lump-sum initial investment and a single final exit value. IRR (Internal Rate of Return) handles multiple ongoing cash inflows and outflows (e.g. SIPs or dividends).
Does CAGR include inflation or taxes?
No, nominal CAGR calculated from prices does not adjust for inflation or capital gains tax. Subtract annual inflation to approximate real CAGR.