CAGR Calculator
Calculate Compound Annual Growth Rate for investments, business growth, and financial analysis
Calculate Compound Annual Growth Rate
Choose what you want to calculate based on available data
Starting value of investment or business metric
Ending value of investment or business metric
Time period for the investment or growth analysis
Results
Formula: CAGR = (FV/PV)^(1/t) - 1
Time Period: 1 years
Growth Factor: N/Ax
Initial Value: $0
Final Value: $0
Annualized Growth: 0.00% per year
Growth Analysis
Example Calculation
Stock Investment Example
Initial Investment: $10,000 (January 2020)
Final Value: $16,500 (January 2025)
Time Period: 5 years
Simple Growth Rate: (16,500 - 10,000) / 10,000 = 65%
CAGR Calculation
CAGR = (FV/PV)^(1/t) - 1
CAGR = (16,500/10,000)^(1/5) - 1
CAGR = (1.65)^(0.2) - 1
CAGR = 10.54% per year
This means the investment grew at an average rate of 10.54% per year
CAGR Benchmarks
S&P 500
Long-term average
Bonds
Government bonds
Inflation
US historical average
Real Estate
Long-term average
Key Points
CAGR smooths out volatility for accurate comparison
Assumes profits are reinvested each year
Doesn't account for risk or volatility
Useful for comparing investments over different periods
Higher CAGR generally indicates better performance
Understanding CAGR (Compound Annual Growth Rate)
What is CAGR?
CAGR (Compound Annual Growth Rate) represents the yearly rate of return required for an investment to grow from its initial value to its final value over a specific time period. It assumes that profits are reinvested each year.
Why Use CAGR?
- •Smooths out volatility to show average growth
- •Enables comparison of different investments
- •Standardizes returns across different time periods
- •Shows the "steady" rate of growth needed
CAGR Formula
CAGR = (FV/PV)^(1/t) - 1
- FV: Final Value of the investment
- PV: Present Value (initial investment)
- t: Time period in years
- ^(1/t): Taking the t-th root
Note: CAGR assumes steady growth and doesn't reflect actual year-to-year volatility. Real investments rarely grow at a constant rate.
CAGR vs Simple Growth Rate
CAGR (Compound)
- • Shows annualized growth rate
- • Accounts for compounding effect
- • Better for long-term analysis
- • Enables period comparison
Simple Growth Rate
- • Shows total percentage growth
- • Doesn't account for time period
- • Simple percentage calculation
- • Good for quick comparisons
Practical Applications
Investment Analysis
Compare mutual funds, stocks, and other investments over different time periods
Business Growth
Analyze revenue, profit, or market share growth rates over time
Financial Planning
Project future values and set realistic growth targets