CAGR (Compound Annual Growth Rate) is the rate at which an investment grows from a beginning value to an ending value, assuming profits are reinvested each year. It smooths out year-to-year volatility to give a single representative growth rate over a period.

How is CAGR calculated?

CAGR = (Ending Value / Beginning Value) ^ (1 / Years) − 1. For example, if $10,000 grew to $25,000 over 10 years, CAGR = (25000/10000)^(1/10) − 1 = 9.60% per year.

What is the difference between CAGR and average annual return?

Average annual return simply averages yearly returns and can be misleading. CAGR accounts for compounding and shows the actual steady growth rate needed to reach the end value. For volatile investments, CAGR is always equal to or lower than the arithmetic average return.

The S&P 500 has historically delivered a CAGR of about 10% (7% inflation-adjusted). A CAGR of 7–10% is considered strong for a diversified portfolio. Individual stocks or real estate may show higher CAGRs but with more risk.

CAGR Calculator

Calculate compound annual growth rate (CAGR) from beginning and ending values. Includes investment projection, comparison of two investments, and professional analysis with real CAGR, after-tax CAGR, and Sharpe ratio.

Beginning Value ?

Ending Value ?

Number of Years ?

CAGR

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Total Return —

Growth Multiple —

Extended More scenarios, charts & detailed breakdown ▾

Beginning Value

Ending Value

Number of Years

CAGR

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Total Return —

Growth Multiple —

Professional Full parameters & maximum detail ▾

Beginning Value

Ending Value

Number of Years

Inflation Rate (%) ?

Capital Gains Tax Rate (%) ?

Annual Volatility (%) ?

Risk-Free Rate (%) ?

Return Metrics

Nominal CAGR —

Real CAGR (Inflation-Adjusted) —

After-Tax CAGR —

Risk & Time Analysis

Sharpe Ratio Estimate —

Doubling Time (Rule of 72) —

Rule of 72 CAGR Check —

How to Use This Calculator

Enter your beginning value, ending value, and number of years to get the CAGR instantly.
Use the Project Growth tab to see what a given CAGR produces over time.
Use the Compare Investments tab to compare two different investments side-by-side by CAGR.
Use the Professional tab for inflation-adjusted real CAGR, after-tax CAGR, Sharpe ratio estimate, and doubling time analysis.

Formula

CAGR = (Ending Value / Beginning Value) ^ (1 / Years) − 1
Real CAGR = (1 + Nominal CAGR) / (1 + Inflation) − 1
Doubling Time = 72 / CAGR% (Rule of 72)

Example

Example: $10,000 invested, grows to $25,000 over 10 years. CAGR = (25,000/10,000)^(1/10) − 1 = 9.60%/year. With 3% inflation: Real CAGR = (1.096/1.03) − 1 = 6.41%.

Frequently Asked Questions

CAGR (Compound Annual Growth Rate) is the rate at which an investment grows from a beginning value to an ending value, assuming profits are reinvested each year. It smooths out year-to-year volatility to give a single representative growth rate over a period.
CAGR = (Ending Value / Beginning Value) ^ (1 / Years) − 1. For example, if $10,000 grew to $25,000 over 10 years, CAGR = (25000/10000)^(1/10) − 1 = 9.60% per year.
Average annual return simply averages yearly returns and can be misleading. CAGR accounts for compounding and shows the actual steady growth rate needed to reach the end value. For volatile investments, CAGR is always equal to or lower than the arithmetic average return.
The S&P 500 has historically delivered a CAGR of about 10% (7% inflation-adjusted). A CAGR of 7–10% is considered strong for a diversified portfolio. Individual stocks or real estate may show higher CAGRs but with more risk.

Related Calculators

Sources & References (5) ▾

SEC Investor.gov — Investment Calculators — U.S. Securities and Exchange Commission
FINRA — Understanding Investment Returns (CAGR) — Financial Industry Regulatory Authority
Federal Reserve — Historical Market Returns Data — Federal Reserve
CFA Institute — GIPS Standards for Performance Reporting — CFA Institute
SEC — Mutual Fund Cost and Return Calculator — U.S. Securities and Exchange Commission