CAGR Calculator
Calculate Compound Annual Growth Rate for Your Investments
Calculate CAGR
Growth Visualization
This calculator is for educational purposes. Always consult with a financial advisor for investment decisions.
CAGR Calculator – Calculate Annualized Investment Growth Online
Instantly compute your compound annual growth rate with our free tool. Learn the formula, interpret results, and compare investments like a pro.
What is CAGR?
CAGR (Compound Annual Growth Rate) measures your investment’s smoothed annual growth, ignoring volatility. Think of it as your portfolio’s "average speedometer" over time.
✅ Why it matters:
- A $10,000 investment growing to $20,000 in 5 years has a 14.87% CAGR – even if yearly returns swung wildly.
- Unlike absolute returns, CAGR lets you fairly compare stocks, mutual funds, or business revenue across different timeframes.
How to Use This CAGR Calculator
- Enter your numbers:
- Initial investment (e.g., $10,000)
- Final value (e.g., $25,000)
- Time period (e.g., 7 years)
- Get instant results: See your CAGR % and growth chart.
📌 Pro tip: For SIPs (systematic investments), use XIRR calculator instead.
[EMBED INTERACTIVE CALCULATOR HERE]
*(Live example: $10,000 → $19,672 in 8 years = 8.5% CAGR)*
CAGR Formula & Manual Calculation
The CAGR formula converts irregular returns into an annualized rate:CAGR=(Final ValueInitial Value)1Years−1CAGR=(Initial ValueFinal Value)Years1−1
Example:
- Initial Value (IV): $5,000
- Final Value (FV): $12,000
- Years (n): 6
- CAGR: ($12,000/$5,000)^(1/6) - 1 = 15.10%
🔧 Excel shortcut: =((FV/IV)^(1/n))-1
CAGR vs. Other Metrics
| Metric | Pros | Cons | When to Use |
|---|---|---|---|
| CAGR | Smooths volatility | Ignores cash flows | Multi-year comparisons |
| AAGR | Shows year-by-year trends | Overstates volatile growth | Short-term analysis |
| Absolute | Simple dollar-value tracking | Misleading for long periods | Quick profit/loss checks |
Real-World CAGR Examples
Case 1: Stocks vs. Mutual Funds
- Stock A: $8,000 → $22,000 in 10 years (10.66% CAGR)
- Fund B: $8,000 → $18,000 in 10 years (8.45% CAGR)
💡 Lesson: Higher absolute returns ($22k > $18k) don’t always mean higher CAGR.
Case 2: Business Revenue Growth
A startup grows revenue:
- Year 1: $200K → Year 5: $1.2M
- CAGR = 43.09% (even if some years saw declines)
Limitations of CAGR
⚠️ Use cautiously when:
- Volatility matters: A 50% crash + 50% surge ≠ 0% CAGR.
- Cash flows exist: Doesn’t account for added/withdrawn funds (use XIRR).
- Timeframe is short: 1-2 year CAGRs can be skewed by outliers.
FAQ: Quick Answers
Q: Is CAGR the same as ROI?
A: No. ROI shows total return, while CAGR annualizes it.
Q: Can CAGR be negative?
A: Yes. A drop from $10,000 → $7,000 over 3 years = -10.06% CAGR.
Q: What’s a good CAGR for stocks?
A: Historically, 8-10% CAGR matches market averages.