About the CAGR Calculator
CAGR, the compound annual growth rate, is the yearly return that would take an investment from its beginning value to its ending value if it grew at the same rate every year. It turns bumpy returns from stocks, index funds, real estate or crypto into one number, so you can compare investments held for different lengths of time. Businesses use the same formula for revenue or user growth.
Enter the period in years or pick the exact buy and sell dates, and use the last card to see what a starting amount grows to at a given CAGR.
How to use
- Enter the beginning value (what you invested) and the ending value (what it is worth now or what you sold it for).
- Enter the period in years, or switch to Dates and pick the start and end dates – partial years are counted exactly.
- The CAGR, total return (ROI), gain and multiple appear instantly, together with a year-by-year value table.
- In the last card, enter an amount, a growth rate and a number of years to project the future value.
CAGR formula with an example
CAGR = (ending value ÷ beginning value)1 ÷ years − 1
Example: $10,000 that grows to $18,000 in 5 years is an 80% total return, but the CAGR is 1.80.2 − 1 = 12.47% a year. Simply dividing 80% by 5 (16%) overstates the return because it ignores compounding.
| Measure | Formula | What it tells you |
|---|---|---|
| Total return (ROI) | (end − start) ÷ start | Return over the whole period |
| Simple average | total return ÷ years | Ignores compounding, overstates growth |
| CAGR | (end ÷ start)1/n − 1 | Compounded return per year |
The rule of 72
Money roughly doubles in 72 ÷ CAGR (%) years: about 12 years at 6%, 9 years at 8% and 6 years at 12%. Going the other way, an investment that doubled in 10 years had a CAGR of about 7.18%. For reference, the S&P 500 has historically returned roughly 10% a year including dividends, before inflation.
Limits of CAGR
- CAGR only looks at the first and last values. A fund that fell 40% and recovered can show the same CAGR as one that rose steadily, so check volatility and drawdowns separately.
- Deposits and withdrawals during the period distort CAGR. For regular contributions (401(k), IRA, dollar-cost averaging) use IRR/XIRR or a money-weighted return.
- The result is a nominal return before taxes, fees and inflation.
FAQ
Is CAGR the same as average annual return?
Not quite. The arithmetic average of yearly returns is usually higher than the CAGR when returns vary. CAGR is the geometric (compounded) average and tells you what you actually earned per year.
Can CAGR be negative?
Yes. If the ending value is below the beginning value, the CAGR is negative. For example, $10,000 that falls to $7,000 over 3 years has a CAGR of about −11.21%.
Should I use CAGR for less than a year?
You can, but it annualizes the result, so short-term gains look huge: a 10% gain in 3 months is a CAGR of about 46%. For holdings under a year, the total return is more meaningful.
How do I calculate CAGR in Excel or Google Sheets?
Use =(End/Start)^(1/Years)-1, or =RRI(Years, Start, End). For irregular cash flows use =XIRR(values, dates).