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CAGR Calculator.

Annualized return for a period (start to end value)

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CAGR: 14.87%

CAGR

14.87%

How to Use the CAGR Calculator

Calculate the Compound Annual Growth Rate (CAGR) of an investment. CAGR shows the average annual return rate that would take you from initial value to final value.

  1. Enter the initial investment value (starting value).
  2. Enter the final investment value (ending value).
  3. Enter the investment period in years.
  4. View the CAGR percentage result.
  5. Use CAGR to compare different investments or assess historical performance.

CAGR Calculation Formula

CAGR smooths out volatility and shows the average annual return rate.

CAGR Formula

CAGR = [(Ending Value / Beginning Value)^(1/n)] - 1

Where n is the number of years. This formula calculates the consistent annual growth rate.

Example:

Input: Initial: $100,000, Final: $200,000, Years: 5

Calculation: CAGR = [(200,000 / 100,000)^(1/5)] - 1 = [2^0.2] - 1

Result: CAGR = 14.87%

CAGR Interpretation

If CAGR = r%, investment grew at r% annually on average

CAGR shows what consistent annual return would achieve the same result.

Example:

Input: CAGR of 12%

Calculation: Investment grew at average of 12% per year

Result: Equivalent to consistent 12% annual returns

Real-World Use Cases

CAGR helps compare investments and understand historical performance.

Investment Performance Comparison

Compare returns of different investments over the same time period.

Example: Stock A: CAGR 15% vs. Stock B: CAGR 10% - Stock A performed better

Mutual Fund Analysis

Evaluate mutual fund performance over 3, 5, or 10-year periods.

Example: Fund A: 12% CAGR over 5 years vs. Fund B: 10% CAGR - Fund A is better

Portfolio Assessment

Calculate overall portfolio CAGR to assess investment strategy success.

Example: Portfolio grew from $500,000 to $1,000,000 in 7 years = 10.4% CAGR

Goal Setting

Determine required CAGR to reach investment goals.

Example: Need $1M from $500K in 5 years = need 14.87% CAGR

Historical Analysis

Analyze how investments performed historically to inform future decisions.

Example: S&P 500 historical CAGR over 30 years is approximately 10%

Tips & Best Practices

Tips

  • Use CAGR to compare investments of different time periods by annualizing returns.
  • CAGR smooths volatility - understand that actual returns varied year-to-year.
  • Compare CAGR to relevant benchmarks (S&P 500, market average) for context.
  • Use CAGR for long-term investments (3+ years) - short-term CAGR can be misleading.
  • Consider CAGR alongside other metrics like volatility and maximum drawdown.
  • Remember that past CAGR doesn't guarantee future returns.

Common Mistakes to Avoid

  • Using CAGR for periods less than 1 year - results can be misleading.
  • Comparing CAGR across different time periods without context.
  • Assuming CAGR reflects actual year-by-year returns - it's an average.
  • Ignoring volatility and risk when comparing investments by CAGR alone.
  • Extrapolating past CAGR into future expectations without considering market conditions.

Related Resources

Cite this calculator

Canonical URL: https://mathify.one/en/investment/cagr

Cite as: Mathify. (2026). CAGR Calculator. https://mathify.one/en/investment/cagr

Use Cases

Evaluate Investment Performance

Use CAGR to compare the annualized return of different investments over the same period, helping you assess which performed better.

Example: Compare a stock that grew from $1,000 to $2,000 in 5 years with a bond that grew from $1,000 to $1,500 in the same period.

Set Growth Expectations

Project future value based on a desired CAGR or understand what growth rate is needed to reach a financial goal.

Example: If you want to double your $10,000 investment in 7 years, you need a CAGR of about 10.4%.

Frequently Asked Questions

What is CAGR and how is it calculated?
CAGR (Compound Annual Growth Rate) is the mean annual growth rate of an investment over a specified period longer than one year. It is calculated using the formula: CAGR = (Final Value / Initial Value)^(1 / Years) - 1. This calculator does that for you.
What inputs do I need to use this calculator?
You need three inputs: the initial value of the investment (in dollars), the final value (in dollars), and the number of years the investment was held. Enter these and the calculator will compute the CAGR.
Can I use this calculator for any type of investment?
Yes, as long as you have the initial and final values and the time period in years, you can calculate the CAGR for stocks, mutual funds, real estate, or any investment that has a clear beginning and ending value.

Tips & Common Mistakes

Tips

  • Ensure the initial and final values are in the same currency (dollars) and represent the same investment without additional contributions or withdrawals.
  • Use the number of years as a decimal if the period is not a whole number (e.g., 3.5 years) for more precise results.
  • CAGR smooths out volatility, so it's best used for comparing long-term investments, not for predicting short-term performance.
  • Double-check your inputs: a small error in the final value or years can significantly change the CAGR.

Common Mistakes to Avoid

  • Using the total return percentage instead of the final value. For example, if an investment grew by 50%, the final value is 1.5 times the initial, not 1.5 added to it.
  • Forgetting to account for the time period correctly. CAGR is annualized, so using months instead of years will give an incorrect result.
  • Including additional contributions or withdrawals in the initial or final values, which distorts the growth rate.

Last updated: August 13, 2026