How to use this calculator
- Enter the Starting value, such as the balance at the beginning of the period.
- Enter the Ending value at the end of the period.
- Set the number of Years between the two values (decimals are fine).
- Read the Compound annual growth rate, Total growth and Years to double at this rate, and check the table for the smoothed path.
What CAGR measures
CAGR is the constant rate that would take you from the start value to the end value if growth were perfectly smooth. Real results are uneven, with good and bad years, so CAGR gives a single comparable number for the whole stretch.
CAGR = (End ÷ Start)^(1/t) − 1- Start = value at the beginning
- End = value at the end
- t = number of years between them
It only looks at the two endpoints. What happened in between does not change the result.
Example: a portfolio from $18,000 to $41,000
A portfolio grows from $18,000 to $41,000 over 8 years. Total growth is 127.8%, but that is spread across eight years. The CAGR is 10.84%, meaning the money behaved as if it grew 10.84% every year.
At that rate it would double roughly every 6.7 years. The calculator's table shows the smoothed path, for instance about $36,991 at the end of year 7 and $41,000 in year 8. Actual year-end balances would have been higher or lower.
Negative CAGR and what to compare
CAGR also works when value falls. From $50,000 down to $42,000 over 4 years is a total loss of 16%, which equals a CAGR of −4.27% a year. The doubling time is not defined for a negative rate.
Use CAGR to compare things that happened over different lengths of time. A fund that gained 90% in 5 years and another that gained 60% in 3 years are hard to judge from totals, but their CAGR figures are directly comparable. For a single investment with a stated gain, the ROI calculator gives both views.
Using CAGR in planning
CAGR can be turned around to ask a planning question: what rate do I need to hit a target? If you have $18,000 and want $41,000 in 8 years, you need about 10.8% a year before contributions. If that looks unrealistic, add monthly savings in the compound interest calculator or stretch the timeline.
The Rule of 72 calculator offers a mental shortcut for doubling time and gives a result close to the figure shown here.
Limits and common mistakes
CAGR hides volatility. A smooth 8% and a path that swung between −30% and +50% can end with the same CAGR but feel very different to live through. It is also very sensitive to the start and end dates you pick, so a flattering window can make performance look better than it was.
The calculator assumes no deposits or withdrawals during the period. If money moved in or out, the result mixes your contributions with real growth. It is a historical measure, not a forecast, and it ignores taxes and inflation.
Frequently asked questions
What is a good CAGR?
There is no universal number. Compare it with a benchmark for the same type of asset and the same period, and consider the risk you took to get it.
How is CAGR different from average annual return?
The simple average adds up yearly returns and divides, which overstates growth when returns vary. CAGR accounts for compounding and matches the actual start and end values.
Can CAGR be used for revenue or users?
Yes. Any positive number measured at two points in time works, such as revenue, subscribers or website visits.
Why does the calculator give an error for a zero value?
The formula divides the end value by the start value and takes a root, so both must be above zero and the period must be positive.