CAGR Calculator
Enter a start value, end value, and number of years to get the compound annual growth rate (CAGR) instantly. You can also reverse-solve: fix a target CAGR and find the required end value, or the starting amount you need to invest today. The year-by-year growth table shows exactly how the value compounds at each step.
Formula
Worked example
An investment grows from $10,000 to $18,000 over 5 years. CAGR = (18,000 / 10,000)^(1/5) - 1 = 1.8^0.2 - 1 = 1.1247 - 1 = 12.47% per year. Total growth is 80%, and by the Rule of 72 the investment doubles every 72 / 12.47 = 5.77 years.
What is CAGR?
Compound Annual Growth Rate (CAGR) is the steady annual rate at which an investment or business metric would have grown to reach its final value from its starting value over a given number of years. It irons out the volatility of year-by-year fluctuations and gives a single, comparable number that represents the smoothed growth rate. CAGR does not describe what actually happened each year - it is the hypothetical constant rate that produces the same result.
CAGR formula and how the math works
The core formula is CAGR = (End Value / Start Value)^(1/n) - 1, where n is the number of years. To solve for the end value given a CAGR: End Value = Start Value x (1 + CAGR)^n. To find the start value needed to reach a target: Start Value = End Value / (1 + CAGR)^n. To find how many years a given rate takes to reach a target: n = ln(End Value / Start Value) / ln(1 + CAGR). All four solve modes are available in this calculator.
When to use CAGR and when not to
CAGR is the right tool when you want to compare two investments that have different time horizons on equal footing, benchmark a business metric (revenue, user growth, earnings) against industry peers, or project a future value assuming a steady growth rate. It is less useful when growth is highly irregular and the path matters as much as the endpoint, or when you need to account for cash flows along the way - in those cases, IRR (internal rate of return) or XIRR is more appropriate. CAGR also does not adjust for risk: two investments can share the same CAGR while one took a wild volatile path and the other grew steadily.
The Rule of 72 and doubling time
A quick mental shortcut: divide 72 by the CAGR percentage to estimate how many years the investment takes to double. At 6% CAGR it doubles in about 12 years; at 12% it doubles in 6 years; at 24% it doubles in 3 years. This calculator shows the exact doubling time alongside the CAGR result. The Rule of 72 is an approximation that works best for rates between about 6% and 20%; at very high or very low rates, 69.3 (the natural-log equivalent) gives a slightly more accurate answer.
Typical CAGR benchmarks by investment type
| Asset or context | Typical CAGR range | Notes |
|---|---|---|
| U.S. large-cap stocks (S&P 500) | 9% - 11% | Long-run historical average |
| Developed-market equities | 7% - 10% | Multi-decade averages |
| Real estate (U.S. housing) | 3% - 5% | Nominal, varies by region |
| Investment-grade bonds | 3% - 6% | Depends on rate environment |
| Cash / savings accounts | 0% - 3% | Reflects prevailing interest rates |
| Growth-stage companies | 10% - 20% | Revenue or earnings CAGR target |
| Mature / large businesses | 3% - 5% | Revenue CAGR in stable industries |
| Early-stage startups | 50% - 100%+ | High variance, rarely sustained long term |
| Global inflation (CPI) | 2% - 4% | Target range for most central banks |
Historical and typical CAGR ranges vary widely. These figures are approximate and based on long-run historical data - past performance does not guarantee future results.
Frequently asked questions
What does CAGR stand for?
CAGR stands for Compound Annual Growth Rate. It is the annualised rate of return that, applied each year and compounded, takes an investment from its starting value to its ending value over a specific number of years. Unlike a simple average, CAGR accounts for the compounding effect where growth each year is applied to an ever-larger base.
How is CAGR different from an average annual return?
An average annual return simply adds up each year's percentage gain and divides by the number of years. CAGR, by contrast, is a geometric mean: it solves for the single constant rate that, compounded over the whole period, produces the actual start-to-end change. If an investment gains 50% in year one then loses 33% in year two, the arithmetic average is 8.5%, but the CAGR is 0% because you end where you started.
What is a good CAGR for a stock or investment portfolio?
Context determines this. For a diversified equity portfolio, matching the long-run S&P 500 CAGR of roughly 10-11% is considered solid. For a single growth company, 20-30% revenue CAGR is impressive but not unusual in early years. Mature businesses in stable industries might target 3-5%. Comparing your CAGR to a relevant benchmark, such as a stock index or industry average, is more meaningful than any absolute number.
Can CAGR be negative?
Yes. If the end value is lower than the start value, the CAGR is negative, indicating the investment lost value on average over the period. For example, an investment that falls from $10,000 to $7,000 over 5 years has a CAGR of roughly -6.9% per year.
How do I use CAGR to reverse-solve for a starting investment amount?
Switch the "Solve for" field to "Start value," then enter your target end value, the annual growth rate you expect, and the number of years. The calculator rearranges the CAGR formula as Start Value = End Value / (1 + CAGR)^n to show you exactly how much you need to invest today to reach your goal.
What is the difference between CAGR and IRR?
CAGR compares just two points: start and end. It assumes the entire initial amount is invested at once and no cash flows happen in between. IRR (internal rate of return) handles multiple cash flows at different times, which makes it the right choice for projects or investments with periodic contributions or distributions. For a simple lump-sum buy-and-hold investment, CAGR and IRR give the same answer.