Cagr Calculator

CAGR — compound annual growth rate — answers the question every investor actually asks: "what steady yearly growth would have produced this result?" It compresses a jagged multi-year ride into one smooth rate, and this calculator reports it alongside the context numbers that keep it honest: total return, absolute gain, growth multiple, the simple average return, and the years needed to double.

The Formula

$\text{CAGR} = \left( \frac{\text{Ending value}}{\text{Beginning value}} \right)^{1/\text{Years}} - 1$

The $1/n$ power is what makes it compound rather than average: CAGR is the single rate which, applied and compounded every year, carries the beginning value exactly to the ending value:

$\text{Ending} = \text{Beginning} \times (1 + \text{CAGR})^n$

Worked Example

A portfolio grows from $50,000 to$110,000 over 6 years:

• Growth multiple: 110,000 ÷ 50,000 = 2.20×
• Total return: +120%
• CAGR: $2.2^{1/6} - 1 =$ 14.04% per year
• Simple annual return (total ÷ years): 120% ÷ 6 = 20% per year
• Doubling time at the CAGR (rule of 72): 72 ÷ 14.04 ≈ 5.13 years

Hold the CAGR and the simple return side by side — 14.04% against 20% — because that gap is the most common growth-rate deception in marketing material. The simple average pretends each year added the same dollars; compounding means later growth builds on earlier growth, so the true yearly rate that reaches $110,000 is much lower than the flattering division suggests. If a pitch quotes an "average annual return," ask whether it is CAGR. The calculator shows both so you can see the difference on your own numbers. The reverse case works too:$80,000 shrinking to $60,000 over 4 years gives a CAGR of −6.94% (flagged as decline; doubling time is not applicable and the tool returns none).

What CAGR Is For — and What It Hides

CAGR is the right tool for comparing growth across different time spans on one scale: a fund's 10-year record against another's 5-year, a company's revenue trajectory against a rival's, a property's appreciation against inflation. It is also, deliberately, a two-point measure — beginning and end, nothing between. A portfolio that soared 80% then crashed 40% and one that grew steadily can share a CAGR; the risk lived in the path, and CAGR cannot see it. Three more cautions follow. Endpoint sensitivity: shifting the start or end by one brutal quarter changes the rate dramatically, which is why cherry-picked periods ("CAGR since the March 2020 low!") should trigger suspicion. Cash flows break it: if money was added or withdrawn mid-period, CAGR misattributes the flows to growth — use an internal-rate-of-return (XIRR) calculation instead. Zero and negative values are excluded, mathematically and by this calculator: growth from a zero base is undefined, and an ending value of exactly zero (a total loss) has no meaningful compound rate — it is simply −100% total return.

Frequently Asked Questions

CAGR vs average annual return — which is true?

Both are computed correctly; they answer different questions. The arithmetic average of yearly returns overstates compound growth whenever returns vary (volatility drag: +50% then −50% averages 0% but leaves you at 0.75× your money, a CAGR of about −13.4% over the two years). For "how fast did my money actually grow," CAGR is the truthful one.

Can I use CAGR for revenue or user growth?

Yes — it is arguably more common in business than in investing. Revenue growing from $2M to$5M in 4 years has a CAGR of about 25.7%. The same cautions apply: it smooths over the year the product launched or the quarter growth stalled.

What is the doubling-years figure?

A rule-of-72 estimate: years to double ≈ 72 ÷ CAGR%. At 14.04% that is about 5.13 years — and consistently, the worked example's 2.20× multiple in 6 years sits just past one doubling. For declines the tool omits it, since money shrinking at a compound rate halves rather than doubles (72 ÷ rate gives halving time, if you want it).