How to use the CAGR calculator
The page has four tools for different questions.
- Find CAGR. Enter the starting value, the ending value and the number of years between them. Years can be fractional: 2 years and 6 months is 2.5. The values can be anything that grows: a stock position, a whole portfolio, a fund’s price, or a company’s revenue, earnings or customer count.
- Find end value. Enter a starting value, a growth rate and a number of years to see where a constant rate leads.
- Required CAGR. Enter what you have, the target and the deadline. Add the rate you expect if you want to see whether the plan works and how long the target would really take.
- From yearly returns. Paste a list of yearly percentage returns. The tool compounds them, shows the CAGR, and sets it next to the simple average of the returns so you can see the difference.
For investments, the cleanest inputs come from a period with no deposits or withdrawals. If you added money along the way, the ending value includes your own contributions and the CAGR will overstate the investment’s growth.
The CAGR formula
The other two tools rearrange the same equation:
Years to reach a target = ln(Target ÷ Start) ÷ ln(1 + rate)ln is the natural logarithm. The second formula is how the Required CAGR tool shows how long your expected rate would take.
A worked example
You invested $10,000 in a stock and, with dividends reinvested, the position is worth $21,500 after 7 years.
The total growth is +115.00%, a multiple of 2.15×. Spread evenly, that is a CAGR of 11.56%: the yearly rate that, compounded seven times, produces the same result. At that pace, money doubles about every 6.3 years.
Dividing the total growth by seven gives 16.43%, a number you will sometimes see quoted. It ignores compounding and overstates the yearly rate.
Fractional years work the same way. Growing from $10,000 to $13,200 in two and a half years is a CAGR of 11.75%.
CAGR versus the average annual return
The simple average of yearly returns and the CAGR are not the same, and the average is almost always the more flattering of the two. Take an investment that gains 50% one year and loses 50% the next:
The average of +50% and −50% is 0.00%, which suggests you broke even. You did not. $10,000 grows to $15,000 and then halves to $7,500.00. The CAGR is -13.40% a year, which is the rate you actually earned.
A loss needs a bigger gain to recover from: after falling 50%, you need +100% to get back to where you were. Because of that, the arithmetic average overstates growth whenever returns vary, and the gap widens as the swings get bigger. The example in the From yearly returns tool shows a milder case: eight years that average 8.27% compound at only 7.39%.
Use the CAGR when you want to know what an investment actually did. The average return has its uses in statistics, such as estimating next year’s expected return, but it does not tell you how much money you made.
Using CAGR for portfolios and businesses
The same formula describes any quantity that compounds.
- A portfolio. Use the total value at the start and end of a period without cash flows. If you added or withdrew money, the money-weighted return (IRR) or a time-weighted return is the right measure; our portfolio return calculator covers both.
- Revenue and earnings. Analysts quote revenue CAGR to compare growth between companies of different sizes. A company whose revenue rose from $24 million to $61 million in five years grew at a CAGR of 20.51%. A three- or five-year CAGR is steadier than any single year’s growth rate, which can be distorted by one unusual year.
- Planning. The Required CAGR tool answers questions such as “what return do I need to double my savings in eight years?” In the example it is 9.05%. At the expected 7%, you would have $85,909.31 instead, and would need about 10.2 years to reach the target.
Small differences in rate, large differences in outcome
Because the rate compounds, a few points of CAGR make a large difference over time. Starting from $10,000 over 10 years:
| CAGR | Value after 10 years |
|---|---|
| 5% | $16,288.95 |
| 8% | $21,589.25 |
| 11% | $28,394.21 |
At 8%, stretching the horizon from 10 to 20 years takes the value to $46,609.57: the second decade adds more than the first. When you compare funds or companies by CAGR, check that the periods match, because a CAGR depends heavily on where the start and end dates fall. A period starting at a market low and ending at a high will show a much higher CAGR than the same investment measured a year earlier.
What CAGR does not tell you
- The path. A CAGR of 8% could come from steady growth or from violent swings. It says nothing about volatility or drawdowns along the way.
- Cash flows. Deposits, withdrawals and acquisitions change the ending value without being growth. The formula cannot tell them apart.
- Inflation and costs. The result is nominal. Subtract inflation for a real growth rate (our real return calculator does it precisely), and use values after fees and taxes if those are what you care about.
- The future. A past CAGR is a description, not a forecast. Projections in the end value tool assume the rate holds every year, which real investments never do.