CAGR stands for Compound Annual Growth Rate. It is the mean annual growth rate of an investment over a specified period, assuming profits are reinvested each year. CAGR smooths out volatility to give one comparable annualized figure.

How do you calculate CAGR?

CAGR = (Ending Value ÷ Starting Value)^(1 ÷ number of years) − 1. For example, $10,000 growing to $25,000 in 5 years: (25000/10000)^(1/5) − 1 = 0.2011, or 20.11% CAGR.

A 'good' CAGR depends on the asset class. Historically, the S&P 500 has averaged roughly 10% CAGR over the long term. Bonds return closer to 4–6%. For a private business, anything above 15% sustained is considered strong.

What is the difference between CAGR and average return?

Average return is the arithmetic mean of yearly returns and overstates growth when there's volatility. CAGR is the geometric mean — it reflects the actual compounded path from start to end, making it more accurate for investment performance.

Does this CAGR calculator cost anything?

No. Simple CAGR is completely free, with no sign-up, no account, and no ads. All calculations happen in your browser.

Simple CAGR Calculator — Free Compound Annual Growth Rate Tool

Starting Value

Ending Value

Number of Periods

yrs

Please fill in all fields with valid positive numbers.

Compound Annual Growth Rate

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Starting Value

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Ending Value

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Total Return

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Growth Projection

Compound

Linear

Year-by-Year Breakdown

Period	Value	Annual Gain	Total Growth

What is Compound Annual Growth Rate?

CAGR, in plain English

The Compound Annual Growth Rate is the smoothed-out annual rate at which an investment grows, assuming gains are reinvested every year. It's the answer to: "If my money had grown at exactly the same rate every single year, what rate would it have to be to end up here?"

CAGR turns messy, volatile returns into a single clean number you can compare across investments, businesses, or time periods.

The CAGR Formula

Given ending value EV, starting value SV, and number of years n:

CAGR = ( EV ÷ SV )^1/n − 1

Example. An investment grows from $10,000 to $25,000 in 5 years. CAGR = (25,000 ÷ 10,000)^1/5 − 1 = 20.11%.

CAGR vs. Simple Average Return

Simple average returns can overstate performance. Consider an investment that returns +50% one year and −50% the next — the average looks like 0%, but you've actually lost 25% of your principal.

CAGR is the geometric mean of returns. It reflects the true compounded path from start to end and never lies about volatility the way arithmetic averages do.

Where CAGR is Used

Stocks and portfolios — benchmarking performance against the S&P 500 (~10% long-term CAGR)
Business metrics — revenue, earnings, user, or ARR growth
Mutual funds & ETFs — comparing multi-year track records
Real estate — appreciation of a property or portfolio
Savings goals — projecting future value or timeline

Three modes, one calculator.

1. Calculate CAGR

You know your starting and ending values, and you want to find the annual growth rate that connects them.

Enter: Starting value, ending value, number of years (or months).
Get: Your CAGR as a percentage, plus a chart and year-by-year table.

2. Future Value

Sometimes called a reverse CAGR calculator. You know your starting amount and expected annual rate, and you want to see where it lands after N years.

Enter: Starting value, annual growth rate, years.
Get: Projected future value.

3. Time to Goal

You have a starting amount, a target, and an assumed rate — and you want to know how long it takes to get there.

Enter: Starting value, target value, annual rate.
Get: The number of years required.

What the Chart Shows

The green line is compound growth — the real, accelerating path your money takes when returns reinvest.

The amber dashed line is linear growth — what the same total gain would look like spread evenly across years. The gap between the two lines is the power of compounding, visualized.

CAGR calculations, in practice.

Stock investment over 5 years

You bought $10,000 of a stock five years ago. Today it's worth $18,500.

CAGR = (18,500 ÷ 10,000)^1/5 − 1 = 13.1%

Your investment compounded at 13.1% per year — comfortably above the S&P 500 long-term average.

Startup revenue growth

A SaaS business grew from $500,000 ARR to $4,000,000 ARR over 3 years.

CAGR = (4,000,000 ÷ 500,000)^1/3 − 1 = 100%

Revenue doubled every year on average — strong growth-stage territory.

Real estate appreciation

A home bought for $280,000 is sold 10 years later for $465,000.

CAGR = (465,000 ÷ 280,000)^1/10 − 1 = 5.2%

Price appreciated at about 5.2% annually, not counting rental income, taxes, or maintenance.

Retirement projection

You have $50,000 saved and assume 8% annual returns. How much will you have in 25 years?

FV = 50,000 × (1.08)²⁵ = $342,424

Time does the heavy lifting — that's nearly 7× growth without adding a single additional dollar.

Questions about CAGR.

What is a good CAGR?

It depends entirely on the asset class and risk profile. As reference points: the S&P 500 has historically averaged about 10% CAGR over the long term; investment-grade bonds sit closer to 4–6%; private companies are often targeting 15–25%+ sustained growth; and early-stage startups routinely post CAGRs above 100% during growth phases.

The key question isn't "is this number high?" — it's "is this number high relative to risk and to alternatives?"

What's the difference between CAGR and average annual return?

Average annual return is the arithmetic mean — add up yearly returns and divide. It ignores the order and compounding effect of returns, and it systematically overstates performance whenever there's volatility.

CAGR is the geometric mean — it's the single constant rate that would produce the same final value from the same starting value over the same time period. It's always the more honest number for evaluating actual investment outcomes.

Can CAGR be negative?

Yes. If your ending value is less than your starting value, CAGR will be negative — reflecting that your investment declined on an annualized basis. A negative CAGR is calculated the same way as a positive one; the math doesn't care about direction.

What is a "reverse CAGR" calculator?

A reverse CAGR calculator takes a known growth rate and starting amount and projects the future value. This tool's Future Value mode does exactly that — enter your starting amount, rate, and years, and see where it lands.

How is CAGR different from IRR?

CAGR assumes a single starting investment and a single ending value — no deposits or withdrawals in between. IRR (Internal Rate of Return) handles multiple cash flows in and out over time. If your investment is a one-shot lump sum held to the end, CAGR and IRR produce the same number. If there are contributions or withdrawals, use IRR.

What are the limitations of CAGR?

CAGR hides volatility. Two investments can have identical CAGRs but wildly different year-to-year experiences — one might climb smoothly while the other crashes 60% and recovers. Always pair CAGR with a risk measure like standard deviation, maximum drawdown, or the Sharpe ratio for a complete picture.

CAGR also assumes no contributions or withdrawals during the period. If you added or removed money along the way, you'll want IRR instead.

Is Simple CAGR free to use?

Yes. Completely free, no sign-up, no account, no ads. All calculations happen in your browser — nothing is sent anywhere.

The simplest way to
calculate CAGR.

What is Compound Annual Growth Rate?