Compound Annual Growth Rate (CAGR) Calculator
Calculate the annualized growth rate of investments, compare against market benchmarks, and project compound wealth schedules.
Investment Parameters
Historical US average inflation is ~2.5% - 3.2%
Annualized geometric compound growth rate
Time required to double your wealth at this rate
S&P 500 long-term nominal average is ~10.0%
| End of Year | Portfolio Value | Accumulated Profit |
|---|---|---|
| Initial | $10,000 | +$0 |
| Year 1 | $12,011 | +$2,011 |
| Year 2 | $14,427 | +$4,427 |
| Year 3 | $17,329 | +$7,329 |
| Year 4 | $20,814 | +$10,814 |
| Year 5 | $25,000 | +$15,000 |
How Compound Annual Growth Rate (CAGR) Works
Investment returns fluctuate from year to year due to market volatility. CAGR smooths out annual erratic swings to give you a single baseline rate that shows what your investment returned annually on a compound basis. It is one of the most reliable metrics for comparing different asset classes like equities, bonds, real estate, and private businesses.
The CAGR Formula
CAGR Financial Applications
- ✓Stock & ETF Portfolio Performance Evaluation
Determine the true smoothed annual growth rate of your index fund or equity portfolio over multiple market cycles.
- ✓Real Estate Property Appreciation
Calculate the annualized capital appreciation rate of commercial or residential property across decades.
- ✓Startup & SaaS Revenue Growth Tracking
Measure business ARR or GMV compound growth across funding rounds to demonstrate traction to venture capital investors.
- ✓Mutual Fund vs Benchmark Comparison
Compare an actively managed mutual fund's multi-year CAGR against the benchmark S&P 500 average return.
Why Use This CAGR Calculator
Real Inflation-Adjusted CAGR
Accounts for annual inflation rates to deliver your true real purchasing power growth over time.
Year-by-Year Growth Trajectory
Generates a complete annual compound balance table showing portfolio growth and accumulated dollar gains.
Rule of 72 Doubling Time
Estimates the exact number of years needed to double your initial capital at the calculated compound rate.
One-Click Summary Copy
Export an itemized financial summary for investor presentations, spreadsheets, or personal wealth tracking.
Frequently Asked Questions
What is Compound Annual Growth Rate (CAGR)?
Compound Annual Growth Rate (CAGR) is the constant annual rate of return that would be required for an investment to grow from its beginning balance to its ending balance, assuming profits were reinvested at the end of each year.
What is the mathematical formula for CAGR?
The formula is: CAGR = (Ending Value / Beginning Value) ^ (1 / Number of Years) - 1. Multiply the result by 100 to express it as an annual percentage.
How does CAGR differ from Absolute Return?
Absolute return measures total percentage growth regardless of time (e.g., doubling your money is a 100% absolute return). CAGR factors in the time horizon to reveal annual performance (doubling money in 3 years is 26% CAGR, whereas doubling in 10 years is only 7.2% CAGR).
What is a good CAGR for stock market investments?
Historically, the S&P 500 broad market index has returned an average nominal CAGR of roughly 10% before inflation (around 7% real return after inflation). A CAGR above 10% over a 10+ year period is considered strong performance.
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