CAGR Calculator: Measure Investment Growth Over Time
CAGR (Compound Annual Growth Rate) is the most useful metric for measuring investment performance over multiple periods. Unlike simple average returns, CAGR tells you the annual growth rate that would produce the same final result if the investment grew at a steady rate. Our CAGR Calculator makes it easy to compute this essential metric for stocks, mutual funds, business revenue, or any value that changes over time. Use our CAGR Calculator to estimate your costs.
How CAGR Is Calculated
The CAGR formula is: CAGR = (Ending Value / Beginning Value)^(1 / Number of Years) - 1. It takes the total growth factor, raises it to the inverse of the number of years, and subtracts one to get the annualized rate.
For example, if an investment grows from $10,000 to $19,000 over 5 years: CAGR = ($19,000 / $10,000)^(1/5) - 1 = 1.9^0.2 - 1 = 1.137 - 1 = 13.7% per year.
This 13.7% CAGR means the investment performed as if it grew at a steady 13.7% each year, even if actual annual returns varied significantly.
Using the CAGR Calculator
Enter the beginning value, ending value, and the number of years (or any time period). The calculator returns the CAGR as a percentage. You can also input the total gain percentage directly to see the equivalent CAGR.
The calculator also shows the final value if you enter beginning value, CAGR, and time period — useful for projecting future growth based on historical returns.
CAGR vs Average Returns
Average annual return simply adds up each year's return and divides by the number of years. This can be misleading because it ignores the compounding effect. Consider an investment that returns +50% in year one and -50% in year two:
- Average return: (50% + (-50%)) / 2 = 0%
- Actual result: $10,000 becomes $15,000 after year one, then $7,500 after year two — a net loss
- CAGR: ($7,500 / $10,000)^(1/2) - 1 = -13.4%
The average return falsely suggests no change, while CAGR correctly shows a significant loss. Always use CAGR for evaluating multi-year investment performance.
Where CAGR Is Used
- Stock market returns: Measure portfolio performance over multiple years
- Mutual fund comparison: Compare funds with different inception dates on equal footing
- Business revenue growth: Track annual revenue growth rates for presentations and planning
- Economic indicators: Measure GDP growth, inflation rates, and market expansion
- Personal finance: Compare savings account rates, investment options, and retirement projections
Limitations of CAGR
CAGR assumes smooth, steady growth, which rarely reflects reality. Investments typically experience volatile returns with ups and downs. CAGR also does not account for risk, volatility, or cash flows during the period. For investments with deposits or withdrawals, you need an internal rate of return (IRR) or XIRR calculation instead.
Real-World Example
A mutual fund investment of $25,000 grows to $48,000 over 7 years: CAGR = ($48,000 / $25,000)^(1/7) - 1 = 1.92^0.1429 - 1 = 1.097 - 1 = 9.7%. If you are comparing this to a different fund that grew from $50,000 to $85,000 over 8 years: CAGR = ($85,000 / $50,000)^(1/8) - 1 = 1.7^0.125 - 1 = 1.068 - 1 = 6.8%. The first fund outperformed despite having different starting values and time periods.
Handling Partial Years and Irregular Periods
CAGR assumes you can express the holding period as a single number of years, but real holdings rarely land on anniversaries. If you bought on March 15, 2019 and sold on October 2, 2024, the period is 5 years and about 6.5 months, or roughly 5.55 years. Use the decimal in the calculator rather than rounding to 6, because the exponent changes the result. The difference between 5.55 and 6 years is small on a single figure, but it compounds when you compare several investments with different purchase dates.
The total-gain-percentage input is the cleaner route when you only know the percentage move. A position that rose from $8,000 to $11,600 over 3.5 years is a 45% total gain. The equivalent CAGR is (1 + 0.45)^(1/3.5) − 1 = 1.45^(0.2857) − 1 = about 11.2% per year. Entering the percentage and the period directly avoids transcription errors from retyping dollar values and keeps the two numbers in one place.
- For holdings under one year, run the period as a decimal fraction of a year, such as 0.5, so the annualized number is comparable to multi-year figures.
- If the investment had deposits or withdrawals, switch to XIRR; CAGR is only exact for a single lump sum with no cash flows in or out.
- Compare CAGRs over aligned time periods when ranking funds, since a shorter window with a high rate is not directly comparable to a longer window with a low one.
Start Calculating
Use our CAGR Calculator below to measure the true annualized growth rate of any investment or business metric. Also check our SIP Calculator for regular investment planning and our Compound Interest Calculator to understand the power of compounding.
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Written by the CalcMaster Pro Editorial Team — financial, health, and DIY tools reviewed for accuracy. All calculators run on standard, widely accepted formulas. Always confirm final numbers with a qualified professional for decisions that require official figures.