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.

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.

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.