CAGR Calculator
Calculate the Compound Annual Growth Rate (CAGR) for any investment, business metric, or portfolio. Enter the beginning value, ending value, and number of years to find the true annualized growth rate with a year-by-year value table.
CAGR Results
What Is CAGR?
CAGR stands for Compound Annual Growth Rate. It's the rate at which an investment would have grown each year if it grew at a steady, compounded rate — from the beginning value to the ending value over a specified period.
The formula is: CAGR = (Ending Value / Beginning Value)1/Years − 1
CAGR is useful because real investments don't grow at the same rate every year. CAGR gives you a single, comparable number to evaluate performance across different periods and assets.
CAGR vs. Average Annual Return
Average annual return is the simple arithmetic mean of annual returns. CAGR is the geometric mean — it accounts for compounding and will always be equal to or lower than the simple average. CAGR is the more accurate measure of investment performance over time.
Common Benchmarks
- S&P 500: ~10% nominal CAGR historically (~7% inflation-adjusted)
- Bonds (10-yr Treasury): ~3–4% over long periods
- Savings accounts: 4–5% (current high-yield rates)
- Real estate: ~4–6% nationally on average
Worked Example: Stock Portfolio CAGR
You invested $25,000 in a stock portfolio in 2019. By 2024 (5 years), the portfolio grew to $42,000. Using the CAGR formula: CAGR = (42,000 / 25,000)^(1/5) − 1 = (1.68)^0.2 − 1 = 1.1089 − 1 = 10.89% per year. If the S&P 500 returned 10% over the same period, your portfolio outperformed by nearly 1 percentage point per year — which on $25,000 over 5 years equals an extra $1,400.
CAGR Comparison Table
| Asset Class | Historical CAGR (Nominal) | Inflation-Adjusted | Risk Level |
|---|---|---|---|
| US Large-Cap Stocks (S&P 500) | ~10% | ~7% | Medium-High |
| US Small-Cap Stocks | ~11–12% | ~8–9% | High |
| International Stocks | ~7–8% | ~5–6% | Medium-High |
| Investment Grade Bonds | ~4–5% | ~2–3% | Low-Medium |
| Real Estate (US) | ~5–6% | ~3–4% | Medium |
| High-Yield Savings | ~4–5% | ~1–2% | Very Low |
Frequently Asked Questions
Yes. If the ending value is less than the beginning value, CAGR will be negative — indicating an average annual loss. For example, $10,000 declining to $7,000 over 3 years gives a CAGR of approximately −11%.
CAGR works for two data points (beginning and ending value). IRR handles multiple cash flows at different times — useful for investments with ongoing contributions or irregular payouts. For a simple lump-sum investment with one start and end date, CAGR and IRR produce the same result.
CAGR doesn't reflect volatility or risk. Two investments can have identical CAGRs with very different year-by-year swings. Investors use standard deviation, Sharpe ratio, and maximum drawdown alongside CAGR to assess risk-adjusted performance.
Use the same formula with revenue figures instead of investment values. If a company grew from $2M revenue in 2020 to $5.8M in 2024 (4 years), CAGR = (5.8/2)^(1/4) − 1 = 2.9^0.25 − 1 ≈ 30.4% per year. This is how companies present compound annual growth in earnings calls and investor presentations.
AAGR (Average Annual Growth Rate) is the simple arithmetic mean of annual returns — add up each year's return percentage and divide by the number of years. CAGR is the geometric mean and accounts for compounding. If returns were +50%, −30%, +50%, AAGR = 23.3% but CAGR = only 10.2% — a stark difference. CAGR is the more accurate measure of actual wealth change.