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CAGR Calculator
Calculate the compound annual growth rate for any investment in seconds.
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CAGR
Total Growth
Net Gain
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How to Use This Calculator
Enter the beginning value of your investment — the amount you started with. Then enter the ending value — the current or final value of the investment. Finally, enter the number of years the investment was held. The calculator will instantly compute the CAGR (compound annual growth rate), the total percentage growth over the entire period, and the net gain or loss in dollars. Negative values for net gain indicate a loss, and a negative CAGR reflects a declining investment.
CAGR Formula
CAGR is calculated using the formula: CAGR = (EV / BV)^(1/t) − 1, where EV is the ending value, BV is the beginning value, and t is the number of years. For example, an investment that grows from $1,000 to $2,000 over 5 years has a CAGR of (2000/1000)^(1/5) − 1 = 2^0.2 − 1 ≈ 0.1487, or 14.87% per year. The formula requires the beginning value to be greater than zero. If the ending value is less than the beginning value, the CAGR will be negative, representing a loss.
Example Calculation
Suppose you invested $10,000 in a mutual fund 7 years ago and it's now worth $18,500. The CAGR would be (18,500/10,000)^(1/7) − 1 = 1.85^0.1429 − 1 ≈ 0.0920, or 9.20% per year. The total growth is (18,500 − 10,000) / 10,000 × 100 = 85%, and the net gain is $8,500. This CAGR of 9.20% slightly underperforms the historical S&P 500 average of ~10%, giving you a useful benchmark for evaluating the fund's performance.
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Frequently Asked Questions
What is CAGR?
CAGR stands for Compound Annual Growth Rate. It represents the rate at which an investment would have grown if it grew at the same rate every year and the profits were reinvested at the end of each year. CAGR smooths out the volatility of year-to-year returns, making it useful for comparing investments over different time periods.
What is a good CAGR for an investment portfolio?
The S&P 500 has historically delivered a CAGR of about 10% per year before inflation (roughly 7% after inflation). A CAGR above 10% is generally considered strong for a diversified portfolio. For individual stocks or high-growth sectors, CAGRs of 15–25% are possible but come with higher risk. What's 'good' depends on your risk tolerance and investment horizon.
What is the difference between CAGR and average annual return?
The average annual return is the arithmetic mean of yearly returns, while CAGR is the geometric mean that accounts for compounding. If an investment drops 50% one year and gains 100% the next, the average return appears to be 25%, but the CAGR is actually 0% — you're back where you started. CAGR gives a more accurate picture of actual investment performance.
How is CAGR used in business valuations?
In business valuations and analysis, CAGR is used to measure revenue growth, earnings growth, and customer acquisition rates. Analysts use CAGR to assess whether a company is growing faster or slower than competitors or industry benchmarks. It's also commonly used in pitch decks and financial projections to demonstrate sustainable growth trajectories.
Can CAGR be negative?
Yes, CAGR can be negative. A negative CAGR indicates that the investment lost value over the time period. For example, if you invested $2,000 and it declined to $1,000 over 5 years, the CAGR would be approximately -12.94%. Negative CAGR is a valid and important metric for understanding loss-making investments.
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