CAGR Calculator

CAGR (Compound Annual Growth Rate) is the single most important number in investing. It tells you the rate at which your money actually grew per year, after smoothing out the bumps. CAGR is how you compare wildly different investments — a stock, a fund, a real-estate flip — on equal footing.

Convert any start-and-end investment value into an annualised compounding growth rate.

Currency:

Initial Value

Final Value

Number of Years

Period5

Compound Annual Growth Rate

CAGR–

Absolute Return–

Total Gain–

Multiple of Money–

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Why CAGR Beats Absolute Returns

If you tell someone your investment grew 200%, that sounds incredible — until they ask over how long. 200% over 2 years is a CAGR of 73%; over 20 years it’s just 5.6%. CAGR removes the time-confusion and gives you a per-year growth rate any investment can be compared against.

The CAGR Formula

CAGR = (FV / IV)1/n − 1

Where FV is the final value, IV is the initial value, and n is the number of years. The result is expressed as a decimal (multiply by 100 for a percentage).

Worked Example

Example: You bought a stock at $10,000 and sold for $25,000 after 5 years. CAGR = (25,000/10,000)^1/5 − 1 = 20.11% per year. The same gain over 10 years would be just 9.6% CAGR — context completely changes the story.

CAGR Limitations

Only works for single in / single out. If you added or withdrew money mid-way, use XIRR instead.
Hides volatility. A 10% CAGR could come from a smooth ride or a roller-coaster.
Not a forecast. Past CAGR ≠ future CAGR.

Frequently Asked Questions

CAGR vs absolute return — what’s the difference?▾

Absolute return is total % change ignoring time. CAGR is the per-year compounding rate. Always quote CAGR when comparing investments of different durations.

CAGR vs IRR vs XIRR?▾

CAGR works for one inflow and one outflow. IRR / XIRR work for any pattern of multiple cash flows over time. Use CAGR when you held a single investment from start to end; XIRR for SIPs and irregular contributions.

What’s a ‘good’ CAGR?▾

Context matters. Equity broad indices: 10–13% historical. Bonds: 4–7%. Real estate: 6–9%. If your investment has done less than your benchmark, you’re underperforming.

Can CAGR be negative?▾

Yes — if final value < initial value. A negative CAGR means your money compounded downward.

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