CAGR Calculator
Find out the exact annualized growth rate (CAGR) of an investment between two points in time.
Growth Over Time
| Period | Invested | Balance | Interest Earned | Real Value |
|---|
What is CAGR?
The Compound Annual Growth Rate (CAGR) is the rate of return that would be required for an investment to grow from its beginning balance to its ending balance, assuming the profits were reinvested at the end of each year of the investment's lifespan.
Unlike absolute return, which just measures total profit, CAGR factors in time. This makes it the standard metric for comparing the performance of different assets (like mutual funds, real estate, or stocks) over multi-year periods. If you want to model future growth instead, use our Timeline Simulator.
The CAGR Formula
The formula for calculating CAGR is: CAGR = [(Final Value / Initial Value) ^ (1 / n)] - 1
Where n is the number of years. For example, if an investment grows from $10,000 to $20,000 in 5 years, the CAGR is (20,000 / 10,000)^(1/5) - 1 = 14.87%.
Remember that CAGR is an average. It smooths out volatility and assumes steady growth, whereas in reality, markets fluctuate year to year.
See how CAGR differs from the raw absolute return of an investment, or project future growth instead with the Timeline Simulator.