CAGR Calculator

Compound Annual Growth Rate Estimator

Compound Annual Growth Rate
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Total Growth

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Absolute Gain

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Time Period

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Growth Projection

Formula Used

CAGR = (Ending Value / Beginning Value)^(1 / Number of Years) - 1

What is Compound Annual Growth Rate (CAGR)?

The Compound Annual Growth Rate (CAGR) is the rate at which an investment grows from its beginning value to its ending value, assuming the profits are reinvested at the end of each year. It represents the smoothed annual rate of growth as if it had grown at a steady rate ā€” making it a reliable metric for comparing investments over time.

Unlike simple growth percentages, CAGR accounts for the compounding effect, giving you a single, clean number that reflects true investment performance regardless of yearly fluctuations.

CAGR Formula

The CAGR is calculated using the following formula:

CAGR = ( EV / BV ) ^ ( 1 / n ) āˆ’ 1
EV = Ending Value (final investment value)
BV = Beginning Value (initial investment value)
n = Number of years (investment period)

How CAGR is Calculated ā€” An Example

Let's say you invested $10,000 and it grew to $18,000 over 5 years. Here's how the CAGR is computed step by step:

Step-by-Step Calculation

Step 1: Divide ending by beginning value ā†’ 18,000 / 10,000 = 1.8

Step 2: Raise to the power of (1/5) ā†’ 1.8 ^ 0.2 = 1.1247

Step 3: Subtract 1 ā†’ 1.1247 āˆ’ 1 = 0.1247

Step 4: Multiply by 100 ā†’ CAGR = 12.47%

This means your investment grew at an average rate of 12.47% every year, compounded annually, over the 5-year period.

Where CAGR Matters

CAGR is one of the most widely used financial metrics across personal finance, business analysis, and investing. Here are some of the most common applications:

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Investment Returns

Measure how a stock, mutual fund, or portfolio has truly grown over time.

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Business Growth

Compare revenue or profit growth across companies or time periods.

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Savings & FDs

Evaluate the effective annual return on savings accounts or fixed deposits.

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Future Projections

Forecast future value of an investment based on historical growth rate.

Limitations of CAGR

While CAGR is a powerful and convenient metric, it has some important limitations you should be aware of:

CAGR does not account for volatility. An investment can swing wildly year-to-year, yet still show an attractive CAGR. The smoothed rate masks real risk.
It assumes constant, steady growth ā€” which is rarely the case in real markets. Actual returns fluctuate significantly from year to year.
CAGR only considers the start and end points, ignoring everything in between ā€” including any withdrawals or additional contributions made during the period.
It should never be used as the sole metric for investment decisions. Always consider risk, standard deviation, and other performance indicators alongside CAGR.

About This CAGR Calculator

This free online CAGR Calculator helps you instantly compute the Compound Annual Growth Rate for any investment. Simply enter your beginning value, ending value, and the number of years ā€” and the calculator does the rest.

Along with the CAGR percentage, it also displays your total growth percentage, absolute monetary gain, and a visual growth projection chart so you can clearly see how your investment would have compounded over time.

Whether you're evaluating stocks, mutual funds, real estate, or business revenue ā€” this tool gives you quick, accurate insights to make better financial comparisons.

This calculator is provided for informational and educational purposes only. Results are based on the values you enter and assume constant compounding. This tool does not constitute financial advice. All investment decisions should be made in consultation with a qualified financial advisor.