CAGR Calculator
An investment that went +40%, then -15%, then +22% over three years didn't grow 47% - it grew at its compound annual growth rate, the single rate that would have taken the same money from the same start to the same finish at steady speed. CAGR = (ending ÷ beginning)^(1/years) − 1, and it is the only fair way to compare a wild ride with a boring one, a fund with a benchmark, or this year's portfolio with your neighbor's boast.
This calculator runs it instantly and adds the two sanity numbers professionals keep handy: the total multiple and the doubling time at that rate (Rule of 72 made precise). The note underneath keeps the recovery trap visible - a 50% loss needs a 100% gain to break even - which is the reason steady compounding beats spectacular swings over any real holding period.
How to use
- Enter the beginning value, the ending value, and the years between them.
- Read the annualized rate, total growth and doubling time.
- Compare: same CAGR with half the volatility is the better investment, every time.
Frequently asked questions
What is CAGR in simple terms?
The smoothed yearly rate: the growth percentage that, applied every year with compounding, lands exactly where your investment actually landed. A portfolio that doubled in 6 years has a 12.2% CAGR - even if it never grew exactly 12.2% in any single year. It converts stories into a comparable number.
How is CAGR different from average return?
The arithmetic average of +50% and −50% is 0%, but the money is down 25% - averages ignore sequencing. CAGR uses the geometric path and tells the truth: √(1.5×0.5)−1 = −13.4%. Any comparison built on averaged yearly returns flatters volatility; CAGR doesn't.
What is a good CAGR?
Context decides: 7% real has been the long-run equity market's rough song; a business growing revenue 20-30% a year is elite; a 40% CAGR sustained for a decade is almost unheard of. The right question is CAGR versus the risk-free alternative plus the risk you took - the calculator gives you the number; the benchmark gives it meaning.
Does CAGR account for additional contributions?
No - it assumes one sum in, one sum out. For a portfolio with regular deposits, use the money-weighted return (IRR) instead; running CAGR on the combined deposits will overstate growth. This tool is honest for lump sums and for business metrics like revenue or users, which is where it's most used.