CAGR Calculator (Compound Annual Growth Rate)
Calculate the Compound Annual Growth Rate of your investments
Calculate Your CAGR
Measure the mean annual growth rate of your investment over time
Measure Investment Performance with CAGR Calculator
Understanding how fast your investment grows over time is essential for smart financial planning. Our CAGR calculator helps investors measure the real growth rate of an investment by showing consistent annual returns across a specific time period. This makes it easier to compare different investment opportunities and track long term performance.
Calculate CAGR for Accurate Growth Analysis
When you calculate CAGR, you are finding the average annual growth rate of an investment assuming steady growth. Unlike simple returns, CAGR provides a clear picture of how your investment has performed year after year, even when market values fluctuate.
Easy to Use CAGR Calculation Tool
This CAGR calculation tool is designed to be simple and efficient. By entering the starting value, ending value, and investment duration, you can instantly calculate the compound annual growth rate. It eliminates manual calculations and reduces the risk of errors.
Investment CAGR Tool for Smarter Decisions
Our Investment CAGR tool helps investors evaluate past performance and plan future strategies. Whether you are reviewing stocks, mutual funds, or long term portfolios, this tool allows you to compare growth rates and choose investments that align with your financial goals.
How the CAGR Formula Works
The CAGR formula calculates growth by factoring in compounding over time. It shows how an investment would grow if it increased at the same rate every year. This approach gives a more realistic view of performance compared to simple percentage returns.
CAGR Calculator Free for Everyone
This CAGR calculator free tool is accessible to all investors without any sign up. It provides fast and reliable results, making it useful for beginners and experienced traders alike. Combined with a trusted stock calculator, it offers a complete solution for analyzing investment growth and performance.
Why Use a CAGR Calculator
Using a CAGR calculator helps you understand long term trends, compare investment returns, and set realistic financial expectations. It brings clarity to investment analysis and supports data driven decisions for better financial outcomes.
Formula
CAGR = [(Final Value ÷ Initial Value)^(1 ÷ Years) - 1] × 100
Why Use CAGR?
- Compare performance of different investments over varying time periods
- Account for compounding effects in your returns
- Smooth out volatility to see true long-term performance
- Set realistic expectations for future growth
CAGR vs. Average Return
Unlike simple average returns, CAGR accounts for the compounding effect of returns over time. This makes it more accurate for measuring investment performance, especially for volatile assets like stocks.
Example
If you invested $10,000 and it grew to $25,000 over 5 years, your CAGR would be approximately 20.11% per year. This means your investment grew at an average annual rate of 20.11%, accounting for compounding.
When to Use CAGR
CAGR is your go-to metric when comparing investment performance across different time periods. Unlike simple averages, CAGR accounts for the compounding effect of returns, giving you a more accurate picture of how your money actually grew.
Use CAGR to evaluate mutual funds, stock portfolios, business revenue growth, or any investment that compounds over time. It's particularly valuable when comparing investments with different starting and ending dates.
Real-World Applications
Investment professionals rely on CAGR daily. Portfolio managers compare fund performance using CAGR. Financial advisors use it to set realistic client expectations. Stock analysts calculate historical CAGR to project future growth.
For individual investors, CAGR helps you understand if your returns beat inflation and market benchmarks. If the S&P 500 returned 10% CAGR over the past decade, and your portfolio only achieved 7%, you know you underperformed the market.
CAGR Limitations
CAGR assumes smooth, steady growth - but real investments fluctuate. A stock might crash 50% one year and soar 100% the next, yet show the same CAGR as steady 10% annual growth. This is why you should always review volatility alongside CAGR.
CAGR also ignores cash flows during the period. If you added money each year, CAGR won't accurately reflect your true returns. For investments with regular contributions, use our Average Cost Calculator or Compound Interest Calculator instead.
Frequently Asked Questions
What is CAGR and why is it important?
CAGR (Compound Annual Growth Rate) is the rate of return required for an investment to grow from its initial value to its final value, assuming profits were reinvested. It smooths out volatility to show average annual growth, making it essential for comparing investments over different time periods.
How is CAGR different from average return?
Unlike simple average returns, CAGR accounts for the compounding effect of returns over time. This makes it more accurate for measuring investment performance, especially for volatile assets like stocks.
When should I use CAGR?
Use CAGR to compare investment performance across different time periods, evaluate mutual funds, analyze business revenue growth, or any investment that compounds over time. It's particularly valuable for understanding long-term performance trends.