📈 CAGR Calculator: Compound Annual Growth Rate
By Shihab Mia · Reviewed by ToolNimba Editorial Review, personal finance content · Updated 2026-06-27
This calculator gives an estimate for information only and is not financial advice. CAGR smooths returns into a single yearly rate and hides the ups and downs along the way, so it does not reflect risk, volatility, fees, taxes, or inflation. Past growth never guarantees future results. Confirm any figure against your own statements and speak to a qualified adviser before making investment decisions.
Enter the starting value, the ending value, and how many years it took to see the compound annual growth rate.
CAGR (Compound Annual Growth Rate) is the steady yearly rate that would turn a starting amount into an ending amount over a set number of years, as if it grew by the same percentage every year. It is the most common way to express the long-run return of an investment, a fund, or any figure that grows over time. Enter the beginning value, the ending value, and the number of years, and this calculator returns the CAGR and the total growth straight away.
What is the CAGR Calculator?
This CAGR calculator answers a simple question: if your money had grown by the exact same percentage every single year, what would that percentage be? Real investments rarely move in a smooth line, they jump up one year and fall the next, so comparing a noisy series of yearly returns is hard. The compound annual growth rate collapses all of that into one representative rate. The formula is CAGR = (ending value / beginning value) raised to the power of (1 / years), minus 1, expressed as a percent. It is a geometric mean of growth, which is why it accounts for compounding rather than just averaging the yearly percentages.
A geometric rate is not the same as a simple average of annual returns, and the difference matters. Suppose an investment gains 50% one year and loses 50% the next. The simple average is 0%, which suggests you broke even, but you did not: 100 grows to 150, then falls to 75, a real loss of 25%. CAGR captures that true result because it works from the start and end values, not from the individual yearly numbers. Whenever returns vary, the CAGR will be lower than the simple average, and the gap widens as the swings get larger.
You will often see the formula written with finance shorthand: CAGR = (FV / PV)^(1/n) - 1, where FV is the future (ending) value, PV is the present (beginning) value, and n is the number of years. It is the same calculation our tool runs. In a spreadsheet you can reproduce it directly. In Excel or Google Sheets, the formula =(B2/A2)^(1/C2)-1 returns the CAGR when A2 holds the beginning value, B2 the ending value, and C2 the number of years. Format the cell as a percentage and you have the same answer this page gives you, which is handy when you want to check a result or build it into a larger model.
CAGR is closely related to a couple of mental-math shortcuts. The Rule of 72 estimates how many years a value takes to double: divide 72 by the CAGR percentage. A 9% CAGR doubles money in roughly 72 / 9 = 8 years. Running it backwards, if you know how long something took to double you can estimate its CAGR. These approximations are not exact, but they are a quick sanity check against the precise figure this calculator produces, and they help you reason about growth without reaching for a spreadsheet.
CAGR has clear limits. Because it only looks at the first and last values, it ignores everything in between, so two investments with very different paths can share an identical CAGR. It says nothing about volatility or risk, and it can be misleading over very short periods or when the start or end point is unusually high or low. It also assumes a single lump sum with no money added or withdrawn along the way. If you made regular contributions, took dividends, or had irregular deposits and withdrawals, CAGR will not capture that, and a money-weighted measure like IRR or XIRR is the right tool instead.
Treat CAGR as a clean way to compare long-run growth and to set expectations, not as a forecast or a complete picture of how an investment behaves. It shines when you want one honest number to line up two funds, gauge how fast a company metric has grown per year, or translate a multi-year total return into something you can compare against a savings rate or a benchmark. Pair it with a look at the path, the risk, and the fees, and you have a balanced view.
When to use it
- Comparing the long-run return of two investments, funds, or portfolios on an equal yearly basis.
- Measuring how fast a company metric (revenue, users, subscribers) has grown per year over several years.
- Turning a multi-year total return into a single annual figure you can compare against a savings rate or benchmark.
- Setting realistic expectations for future growth based on a smoothed historical rate.
- Checking a spreadsheet model or a fund factsheet figure against an independent calculation.
- Estimating how many years a value would take to double or triple at its historical growth rate.
How to use the CAGR Calculator
- Enter the beginning value (the starting amount at the start of the period).
- Enter the ending value (what it grew to at the end of the period).
- Enter the number of years between the two values.
- Read off the CAGR (per year) and the total growth over the whole period.
- Use the Rule of 72 (72 divided by the CAGR percent) for a quick estimate of the doubling time.
Formula & method
Worked examples
An investment grows from $10,000 to $20,000 over 5 years.
- Ratio = ending / beginning = 20,000 / 10,000 = 2
- Exponent = 1 / years = 1 / 5 = 0.2
- 2^0.2 = 1.148698
- CAGR = 1.148698 - 1 = 0.148698 = 14.87%
- Total growth = (2 - 1) x 100 = 100%
Result: CAGR is about 14.87% per year. Total growth = 100%
Company revenue rises from $5,000 to $8,000 over 3 years.
- Ratio = 8,000 / 5,000 = 1.6
- Exponent = 1 / 3 = 0.3333
- 1.6^0.3333 = 1.169607
- CAGR = 1.169607 - 1 = 0.169607 = 16.96%
- Total growth = (1.6 - 1) x 100 = 60%
Result: CAGR is about 16.96% per year. Total growth = 60%
A fund falls from $10,000 to $8,100 over 2 years (a negative CAGR).
- Ratio = 8,100 / 10,000 = 0.81
- Exponent = 1 / 2 = 0.5
- 0.81^0.5 = 0.9 (the square root of 0.81)
- CAGR = 0.9 - 1 = -0.10 = -10%
- Total growth = (0.81 - 1) x 100 = -19%
Result: CAGR is about -10% per year. Total change = -19%
CAGR for a value that doubles (ending = 2 x beginning) over different periods
| Years | Total growth | CAGR per year |
|---|---|---|
| 2 years | 100% | 41.42% |
| 3 years | 100% | 25.99% |
| 5 years | 100% | 14.87% |
| 7 years | 100% | 10.41% |
| 10 years | 100% | 7.18% |
Ending value after 10 years at a given CAGR, starting from $10,000
| CAGR per year | Ending value | Total growth |
|---|---|---|
| 5% | $16,289 | 62.89% |
| 8% | $21,589 | 115.89% |
| 10% | $25,937 | 159.37% |
| 12% | $31,058 | 210.58% |
| 15% | $40,456 | 304.56% |
Years to double or triple your money at a given CAGR (Rule of 72 estimate vs exact)
| CAGR per year | Years to double (exact) | Rule of 72 | Years to triple (exact) |
|---|---|---|---|
| 4% | 17.7 | 18.0 | 28.0 |
| 6% | 11.9 | 12.0 | 18.9 |
| 8% | 9.0 | 9.0 | 14.3 |
| 10% | 7.3 | 7.2 | 11.5 |
| 12% | 6.1 | 6.0 | 9.7 |
Common mistakes to avoid
- Confusing CAGR with the simple average of yearly returns. Averaging the yearly percentages overstates the real return whenever they vary. A 50% gain then a 50% loss averages to 0% but actually loses 25%. CAGR uses the start and end values, so it reflects the true compounded result.
- Reading CAGR as a steady, risk-free yearly gain. CAGR is a smoothed figure. The investment almost certainly did not return that exact rate in any single year. It says nothing about volatility, drawdowns, or the path taken between the two endpoints.
- Using an off period or unusual endpoints. Because only the first and last values matter, starting at a market low or ending at a peak can flatter the CAGR. A very short period exaggerates this effect, so prefer longer, representative windows.
- Mismatching the number of years. Count the years between the two values, not the number of data points. Five year-end figures span four years of growth, not five. Getting the exponent wrong skews the result.
- Using CAGR when money was added or withdrawn. CAGR assumes one lump sum with nothing paid in or taken out. If you made monthly contributions or irregular deposits, CAGR misstates your return. Use IRR or XIRR, which weight each cash flow by its size and timing.
- Forgetting to subtract 1 (or to convert to a percent). The ratio raised to the power of 1/n gives a growth factor like 1.1487, not the rate. You must subtract 1 to get 0.1487 and multiply by 100 to read it as 14.87%. Skipping a step is a common spreadsheet slip.
Glossary
- CAGR
- Compound Annual Growth Rate: the constant yearly rate that grows the beginning value into the ending value over the period.
- Beginning value
- The starting amount at the start of the measurement period. Also called present value (PV).
- Ending value
- The amount the investment or metric grew to at the end of the period. Also called future value (FV).
- Total growth
- The overall percentage change from start to end, before annualizing it into a yearly rate.
- Geometric mean
- A type of average that multiplies values and takes a root, used for rates that compound, as CAGR does.
- Annualized return
- A multi-year return expressed as a single equivalent rate per year. CAGR is one common annualized measure.
- IRR
- Internal Rate of Return: a money-weighted annual return that accounts for the size and timing of every cash flow, not just the endpoints.
- Rule of 72
- A shortcut for doubling time: divide 72 by the annual growth percentage to estimate the years a value takes to double.
Frequently asked questions
What is CAGR?
CAGR stands for Compound Annual Growth Rate. It is the single steady yearly rate that would turn a beginning value into an ending value over a number of years, assuming the growth compounds each year. It is widely used to summarize the long-run return of an investment or the growth of a business metric.
How is CAGR calculated?
CAGR = (ending value / beginning value) raised to the power of (1 / years), minus 1, then multiplied by 100 to show a percent. For example, $10,000 growing to $20,000 over 5 years gives (2)^(1/5) - 1 = 14.87% per year.
How do I calculate CAGR in Excel or Google Sheets?
Put the beginning value in A2, the ending value in B2, and the number of years in C2, then enter =(B2/A2)^(1/C2)-1 and format the cell as a percentage. You can also use =POWER(B2/A2, 1/C2)-1 or the built-in =RRI(C2, A2, B2). All three give the same compound annual growth rate.
How is CAGR different from average annual return?
A simple average just adds the yearly returns and divides by the number of years, which ignores compounding and overstates the result when returns vary. CAGR is a geometric rate based on the start and end values, so it reflects what actually happened to your money. CAGR is always less than or equal to the simple average.
What is the difference between CAGR and IRR?
CAGR uses only the first and last values and assumes a single lump sum with no money added or removed. IRR is money-weighted: it accounts for every contribution, withdrawal, and dividend and the exact timing of each. Use CAGR for a clean buy-and-hold figure, and use IRR or XIRR when there are interim cash flows such as monthly investments (a SIP) or staggered deposits.
Can CAGR be negative?
Yes. If the ending value is below the beginning value, the CAGR is negative, showing the equivalent steady yearly rate of decline. For example, a fall from $10,000 to $8,100 over 2 years is a CAGR of about -10% per year.
What is a good CAGR?
It depends on the context and the risk. Broad stock market indexes have historically delivered roughly 7% to 10% per year over long periods before inflation. A higher CAGR usually comes with more risk, and a short or cherry-picked period can flatter the figure, so compare like with like.
How many years will it take my money to double at a given CAGR?
A quick estimate is the Rule of 72: divide 72 by the CAGR percentage. At 8% CAGR, money doubles in about 72 / 8 = 9 years; at 6% it takes about 12 years. The exact answer is years = ln(2) / ln(1 + CAGR), but the Rule of 72 is close enough for most planning.
What are the limitations of CAGR?
CAGR only uses the first and last values, so it ignores everything in between and hides volatility, drawdowns, and the actual path. Two very different investments can share the same CAGR. It also does not account for fees, taxes, inflation, or money added and withdrawn, and it is not a forecast of future returns.
Does CAGR account for inflation?
No. The CAGR this tool returns is a nominal rate. To get a real (inflation-adjusted) CAGR, run the calculation on values expressed in the same year of money, or subtract the average inflation rate from the nominal CAGR as a rough approximation.
Sources
- Compound Annual Growth Rate (CAGR) , Investopedia
- Calculate a compound annual growth rate (CAGR) in Excel , Microsoft Support
- Calculating Investment Returns , U.S. Securities and Exchange Commission (Investor.gov)