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The calculator divides the ending value by the beginning value to get the total growth multiple, raises it to the power of one divided by the number of years to spread that growth evenly with compounding, and subtracts one to turn the factor into an annualized rate of return. In other words, it is an annualized return calculator. It also shows the total growth percentage, the gain in your chosen currency, and the projected value if the same CAGR continued for the same number of years. Results are estimates for planning, not professional financial advice.
CAGR stands for compound annual growth rate, the steady yearly rate that would turn the beginning value into the ending value if growth were perfectly smooth. The formula is: CAGR = (ending value / beginning value)⁽¹ / number of years) - 1.
Worked example: $10,000 growing to $25,000 over 5 years. Divide 25,000 by 10,000 to get 2.5. Raise 2.5 to the power of 1/5 (the fifth root), which gives about 1.2011. Subtract 1 and multiply by 100: the CAGR is 20.11% a year.
The number of years does not have to be a whole number. Three years and six months is 3.5 years, and fractional years work fine in the same formula. The same formula rearranged projects forward: ending value = beginning value × (1 + CAGR)ⁿ.
Pick your currency first, then enter the beginning value (what you invested, or what the asset was worth at the start), the ending value (what it is worth now), and the number of years between the two points.
Click Calculate to see the CAGR, the total growth percentage, the gain in your currency, and the projected value if the same rate continued for the same number of years. You can also reverse the idea: enter a target value and the CAGR you think is realistic to see what a steady rate implies over time.
The tool works the same way for stocks, mutual funds, a lump-sum deposit, crypto, revenue, or any other metric measured at two points in time.
A simple average of yearly returns overstates what you earned whenever returns swing up and down. Take a fund that returns +20%, -10% and +15% over three years: the average is 8.33%, but the actual path turns $100 into about $124.20, which is a CAGR of 7.49%.
The extreme case makes the difference obvious: gain 50% one year, lose 50% the next, and the average return is 0% while your money really shrank by 25%, a CAGR of -13.4%. The average is an arithmetic mean; CAGR is a geometric mean that respects compounding.
That is why the average annual return cannot be trusted as a measure of what happened to your money. CAGR is the only rate that, compounded once a year, connects the true start value to the true end value.
CAGR compares just two points: the start value and the end value. It assumes the whole initial amount was invested at once and nothing was added or taken out in between. That fits a lump-sum investment, a stock bought once, or a company revenue series.
IRR (internal rate of return) and XIRR handle multiple cash flows at different times: monthly SIP contributions, top-ups, withdrawals, rental income, or project payouts. Each payment has been invested for a different length of time, so start and end values alone give a misleading answer. For those cases, use IRR, or XIRR when the payments fall on irregular dates.
Rule of thumb: one amount in at the start and one value at the end means CAGR. Anything with contributions, deposits or withdrawals along the way needs IRR or XIRR. For a simple lump-sum buy-and-hold, CAGR and IRR give the same answer.
Investment growth: $10,000 to $18,000 in 5 years. The total return is 80%, but the CAGR is 12.47% a year, because compounding does the heavy lifting.
A loss: $10,000 falling to $7,000 over 5 years gives a CAGR of -6.89% a year. A negative CAGR simply means the value shrank at that annual pace, which is useful for honest reporting on underperforming positions.
Business revenue: $1 million growing to $3 million in 4 years is a CAGR of 31.61%, the single figure you would quote in an investor presentation. For a company, pick one metric (revenue, profit or earnings per share) and take its value from the first and last annual reports in the period, counting the years between the reports.
Doubling: the Rule of 72 gives a quick sense of pace, divide 72 by the CAGR to estimate the doubling time. At 12% CAGR money doubles in about 6 years; at 7.2%, in about 10.
There is no single good number, the right benchmark depends on the asset and the risk taken. As rough long-run guides: the US stock market (S&P 500) has returned around 9-11% a year nominal; investment-grade bonds around 3-6%; savings accounts roughly 0-3%; and developed-market inflation around 2-4%.
For companies, large established firms growing revenue at 8-12% a year for five years or more are generally considered healthy, mid-sized firms at 15-20% are high-growth, and startups can show 50%+ in early years but rarely sustain it.
The two most honest comparisons are against inflation first (a CAGR below inflation means your money lost buying power) and against a relevant index over the exact same dates second. Past performance is never a guarantee of future results, and every figure on this page is an estimate for planning, not professional financial advice.
CAGR hides volatility. A value that crashed and recovered can show the same CAGR as one that rose smoothly, so always look at the worst year and the biggest drop alongside it.
The period matters enormously. Starting at a market low or ending at a peak flatters the result, which is why investments should be compared over exactly the same dates. Short periods exaggerate: a 40% gain in six months annualises to about 96% CAGR, which is not a sustainable rate, so CAGR is most meaningful over three years or more.
CAGR ignores cash flows in between (use IRR for those) and it looks backwards: a strong historical CAGR is not a forecast. Use it to compare the past, never to project the future blindly. For year over year growth figures of a business, CAGR smooths the series into one number, so pair it with the annual figures themselves.
CAGR stands for compound annual growth rate. It is the steady yearly rate at which a value would have grown from its starting point to its ending point if growth had been reinvested every year. It smooths out ups and downs into one number, which makes it the standard way to compare investments, company revenue, or any metric measured over different lengths of time.
Divide the ending value by the beginning value, raise the result to the power of one divided by the number of years, then subtract 1: CAGR = (ending value / beginning value)⁽¹ / years) - 1. Example: $10,000 growing to $25,000 in 5 years gives (25,000 / 10,000)⁰.2 - 1 = 20.11% a year. Multiply the decimal result by 100 to express it as a percentage.
Use =(ending value / beginning value)⁽¹ / years) - 1, then format the cell as a percentage. Excel also has a built-in function: =RRI(years, beginning value, ending value), which returns the CAGR directly. The same formulas work in Google Sheets.
Yes. If the ending value is lower than the beginning value, CAGR is negative, showing how fast the value shrank each year. For example, $10,000 falling to $7,000 over 5 years is a CAGR of about -6.89% a year. A negative CAGR is still useful information: it quantifies the annual pace of the loss.
It depends on the asset and the risk. As rough guides, the S&P 500 has averaged around 9-11% a year over the long run, bonds around 3-6%, and savings accounts less. A CAGR above inflation means your money grew in real terms; a CAGR above a low-cost index fund over the same dates means the extra risk or effort paid off. Compare against a relevant benchmark rather than chasing an absolute number.
The average annual return is an arithmetic mean of each year's return, so it overstates growth when returns swing. CAGR is a geometric mean that accounts for compounding. If an investment gains 50% and then loses 50%, the average return is 0% but the CAGR is -13.4%, because you really ended with less money. CAGR is the more honest measure of what actually happened to your money.
Only when there is a single investment at the start and a single value at the end. CAGR compares just those two points and ignores any cash flows in between. IRR handles multiple cash flows at different times, and XIRR handles them on irregular dates, so for SIP investments, regular deposits, or projects with payouts, use IRR or XIRR instead.
No, CAGR is not the right measure for SIPs. Each monthly instalment has been invested for a different length of time, so the start and end values alone give a misleading answer. Use XIRR, which accounts for the exact dates and amounts of every payment, to measure the return on a SIP.
Use the Rule of 72: divide 72 by the CAGR percentage to estimate the doubling time in years. A 26% CAGR doubles money in about 3 years, 12% in about 6 years, 7.2% in about 10 years. It is an approximation that works best for rates between about 6% and 20%.
Pick the metric, usually revenue, net profit, or earnings per share, and take its value from the first and last annual reports in your period. Apply (latest / earliest)⁽¹ / years) - 1, counting the years between the reports, not the number of reports. For example, revenue of $20 million in 2021 and $52 million in 2025 spans 4 years: (52 / 20)⁽¹/4) - 1 = about 27%.
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