INVESTING
CAGR Calculator — Compound Annual Growth Rate
By Worldtickers ·
Use our free CAGR calculator to find the compound annual growth rate of any investment between two values over time. Includes a mode for monthly contributions and a reverse mode to back-solve your initial investment, plus the formula, worked examples, and how CAGR compares to average annual return.
This cagr calculator — compound annual growth rate tool focuses on use our free CAGR calculator to find the compound annual growth rate of any investment between two values over time. Includes a mode for monthly contributions and a reverse mode to back-solve your initial investment, plus the formula, worked examples, and how CAGR compares to average annual return. Use it to compare investment returns, income, risk, compounding, and portfolio assumptions while changing price, yield, time, allocation, or contribution inputs.
CAGR Calculator
CAGR Calculator
Enter the starting value, ending value, and number of years to calculate the compound annual growth rate.
What Is CAGR?
CAGR, or compound annual growth rate, is the single steady annual rate of return that would carry an investment from its starting value to its ending value over a specific number of years, assuming every year's gains are reinvested. It is one of the most widely used metrics in investing, corporate finance, and business analysis because it converts a messy, irregular growth path into one clean, comparable number.
Real investments almost never grow at a perfectly constant rate. A stock might rise 25% one year, fall 10% the next, and rise 15% the year after that. CAGR does not care about that path — it only looks at where you started, where you ended up, and how long it took. In effect, CAGR answers the question: "What constant annual growth rate would have produced this exact same result?"
This is why CAGR calculator searches spike whenever investors compare mutual funds, ETFs, individual stocks, or even entire businesses — it is the standard way to normalize growth over different time periods so that a 3-year track record can be meaningfully compared to a 10-year track record. Our stock data platform surfaces historical price data you can plug directly into this calculator to compute CAGR for any holding period.
How to Use This Calculator
This calculator has three modes, depending on what you already know and what you are trying to find.
Standard CAGR
Use this mode when you have a single starting value, a single ending value, and know how many years passed in between — for example, the price of a stock 10 years ago and its price today. Enter the three values and click calculate to get your CAGR as a percentage.
With Monthly Contributions
Use this mode if you added money regularly — for example, a brokerage account you funded with a fixed amount every month. Enter your starting balance, your fixed monthly contribution, your ending balance, and the number of years. The calculator solves for the constant monthly rate that reconciles all three inputs, then annualizes it so you get a number directly comparable to a standard CAGR.
Reverse: Find Initial Value
Use this mode when you know the ending value, an assumed or historical annual growth rate, and the number of years, but want to know what the starting value must have been. This is useful for backward financial planning, such as figuring out how much you would have needed to invest at a target rate to reach today's balance.
The Formula Explained
The standard CAGR formula is: CAGR = (Final Value / Initial Value)^(1 / Number of Years) − 1. You divide the ending value by the starting value, raise that ratio to the power of one divided by the number of years, then subtract 1 and convert to a percentage.
For example, if an investment grows from $10,000 to $20,000 over 9 years: $20,000 / $10,000 = 2. Then 2 raised to the power of (1/9) is approximately 1.080. Subtracting 1 gives 0.080, or an 8.0% CAGR. This matches the classic Rule of 72 relationship — an investment that doubles in 9 years grows at roughly 8% annually, since 72 / 8 ≈ 9. See our Rule of 72 calculator for that quick mental-math shortcut.
When monthly contributions are involved, there is no simple closed-form formula — the calculator instead numerically solves for the constant monthly rate i that satisfies: Final Value = Initial Value × (1 + i)^months + Monthly Contribution × [((1 + i)^months − 1) / i], then annualizes i as (1 + i)^12 − 1. This is the same logic behind an internal rate of return (IRR) calculation, applied to a simplified, regular-interval cash flow schedule.
The reverse formula rearranges the standard formula to solve for the initial value: Initial Value = Final Value / (1 + CAGR)^Number of Years.
Real-World Examples
Example 1: Comparing Two Stocks Over Different Periods
Stock A rose from $50 to $95 over 5 years. Stock B rose from $20 to $60 over 12 years. Stock A's CAGR is (95/50)^(1/5) − 1 ≈ 13.7%. Stock B's CAGR is (60/20)^(1/12) − 1 ≈ 9.6%. Even though Stock B tripled in value — a bigger multiple than Stock A's 1.9x — Stock A actually grew faster on an annualized basis because it did so in less than half the time. CAGR is what makes this comparison possible despite the different holding periods.
Example 2: A Brokerage Account With Monthly Contributions
You start with $10,000, add $200 every month, and after 10 years your account is worth $50,000. Using the "With Monthly Contributions" mode, the calculator solves for the monthly rate that reconciles $10,000 growing alongside $200 monthly deposits into $50,000 over 120 months, then annualizes it — giving you a single growth-rate number you can compare against a benchmark like the S&P 500's long-run CAGR, even though you were adding money the whole time.
Example 3: Reverse-Solving a Retirement Target
Suppose you want $500,000 in 15 years and you assume an 8% annual return. Using the reverse mode: $500,000 / (1.08)^15 ≈ $157,600. That is the lump sum you would need to invest today, growing untouched at 8% annually, to reach $500,000 in 15 years.
Tips and Limitations
Always Compare Over the Same Time Frame
CAGR is only meaningful when comparing investments over roughly the same period. A 40% CAGR over one year and an 8% CAGR over twenty years are not telling you which investment is "better" without more context — short time frames are far more sensitive to a single lucky or unlucky year.
CAGR Hides Volatility
Because CAGR uses only the start and end values, it says nothing about how bumpy the ride was in between. Two investments with identical CAGR can have very different risk profiles. Pair CAGR with a risk-adjusted metric like our Sharpe ratio calculator for a fuller picture.
Watch Out for Survivorship and Cherry-Picked Windows
CAGR figures quoted in marketing materials often use a favorable start or end date. Always check what period a quoted CAGR covers, and consider recalculating it yourself over a different window using this calculator.
The Monthly-Contribution Mode Is an Approximation
It assumes a perfectly regular monthly contribution and a constant rate throughout — real contributions and real returns fluctuate. For an exact answer with irregular, real-dated cash flows, a full XIRR calculation in a spreadsheet is more precise, but this mode is accurate enough for planning purposes in the vast majority of cases.
Frequently Asked Questions
What is CAGR?
CAGR (Compound Annual Growth Rate) is the constant annual rate of return that would take an investment from its starting value to its ending value over a given number of years, assuming profits are reinvested each year. It smooths out the year-to-year volatility of an investment into a single, comparable growth rate — even though real returns rarely move in a straight line, CAGR describes the equivalent steady path that produces the same end result.
How is CAGR different from average annual return?
Average annual return simply adds up each year's percentage return and divides by the number of years — it ignores compounding and can be misleading. CAGR accounts for compounding by working directly from the starting and ending values, so it reflects what actually happened to your money. For example, a portfolio that gains 50% one year and loses 50% the next has an average annual return of 0%, but its CAGR is negative because the 50% loss applies to a larger base than the 50% gain — CAGR captures that reality, average return does not.
Can I calculate CAGR with monthly contributions?
Yes. Use the "With Monthly Contributions" mode above. Ordinary CAGR assumes a single lump sum grows undisturbed, so it cannot directly handle recurring deposits. This mode instead solves for the constant monthly rate that reconciles your starting balance, your monthly contribution, and your ending balance over the period you enter, then annualizes that rate — giving you an apples-to-apples annualized return even when you were contributing along the way.
How do I reverse-calculate the initial investment using CAGR?
Use the "Reverse: Find Initial Value" mode above. If you know the final value, the annual growth rate, and the number of years, the initial value is Final Value ÷ (1 + rate)^years. This is useful for backward planning — for example, figuring out how much you would have needed to invest years ago to reach today's balance at a given assumed rate.
Can CAGR be negative?
Yes. If the final value is lower than the initial value, CAGR will be negative, reflecting an average annual decline over the period. A negative CAGR is a legitimate and useful result — it tells you the constant annual rate of loss that would produce the same outcome, which is just as informative as a positive CAGR when evaluating an investment's actual track record.
Is CAGR the same as XIRR or IRR?
No. CAGR assumes a single cash flow at the start and a single value at the end, with no interim contributions or withdrawals. XIRR (and IRR) are built specifically to handle irregular cash flows — multiple deposits and withdrawals on different dates — and solve for the discount rate that makes the net present value of all those flows equal zero. The "With Monthly Contributions" mode on this page is a simplified, regular-interval approximation of that same idea; for genuinely irregular real-world cash flows, a full XIRR calculation is more precise.
What is a good CAGR for a stock or portfolio?
There is no universal "good" CAGR — it depends on the asset class, risk taken, and time period. As a rough reference, the S&P 500 has returned roughly 10% annualized over many decades before inflation. Individual stocks and shorter time periods can show much higher or lower CAGRs, so always compare CAGR over similar time frames and against a relevant benchmark rather than an arbitrary number.
Why does CAGR ignore volatility?
CAGR only uses the starting value, ending value, and elapsed time — it does not use any of the values in between. Two investments can have the identical CAGR while one moved smoothly upward and the other swung wildly. This is intentional: CAGR is a growth-rate summary, not a risk measure. If you also want to understand volatility, pair CAGR with a risk-adjusted metric like the Sharpe ratio.