CAGR Calculator – Compound Annual Growth Rate

The CAGR Calculator is a powerful tool that helps investors measure the average annual growth rate of an investment over a specific period. Whether you're evaluating stocks, ETFs, mutual funds, or your personal portfolio, understanding CAGR is essential for long-term financial planning and comparing investment options.

What is CAGR?

CAGR stands for Compound Annual Growth Rate. It represents the smoothed annual growth rate of an investment over a time period, assuming the investment has been compounding steadily year over year.

The CAGR formula is:

CAGR = (Ending Value / Beginning Value)^{1 / n} – 1

• Beginning Value – the initial investment amount
• Ending Value – the final investment value
• n – number of years

Why CAGR Matters?

CAGR is one of the most reliable ways to measure investment performance. Unlike average annual returns, it accounts for compounding and eliminates the effects of volatility by showing a steady annual growth rate.

It’s used by financial analysts, investors, and fund managers to compare returns of different investments or benchmark indices over time.

Use Cases for CAGR

• 📈 Evaluate stock performance over 3, 5, or 10 years
• 🏦 Compare mutual funds or ETFs
• 💰 Measure portfolio growth over time
• 📊 Forecast future investment outcomes

CAGR Example

Imagine you invested $10,000 in a stock, and five years later it’s worth $18,000. The CAGR would be calculated as:

CAGR = (18,000 / 10,000)^1/5 – 1 = 12.47%

This means your investment grew at an average rate of 12.47% per year.

CAGR vs. Average Return

Unlike the arithmetic average, CAGR smooths out the year-to-year fluctuations and gives a clearer picture of long-term performance. For example:

• Year 1: +20%
• Year 2: –10%
• Year 3: +15%

The average return is (20 – 10 + 15)/3 = 8.33%, but CAGR might be much lower due to the compounding effect of losses.

Key Benefits of This Calculator

• ✅ Fast and accurate CAGR calculation
• ✅ User-friendly and mobile optimized
• ✅ No registration required
• ✅ Built by real investors for real investors

Frequently Asked Questions (FAQ)

What is CAGR?

CAGR stands for Compound Annual Growth Rate. It is the average annual growth rate of an investment over a specified period of time.

How do I calculate CAGR?

Use the formula: CAGR = (Final Value / Initial Value) ^ (1 / Years) - 1. Or simply use our calculator for quick results.

Why is CAGR important?

CAGR helps you understand the consistent annual return on investment, even if the investment grew unevenly year by year.

Is CAGR the same as average return?

No. Average return does not account for compounding and can be misleading. CAGR is more accurate for comparing investments.

Can CAGR be negative?

Yes. If your investment lost value over time, the CAGR will be negative, indicating an average annual decline.

Is CAGR the same as annual return?

No. Annual return can fluctuate each year, while CAGR shows a constant rate that would take you from start to end value over a period.

Can CAGR be used for forecasting?

Yes, it’s useful for estimating future value, but it assumes constant growth which is often unrealistic in volatile markets.