CAGR Calculator
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What Your Result Means
- CAGR: The hypothetical constant annual rate that would take the beginning value to the ending value over the given time period. It smooths out year-to-year volatility into a single comparable number — think of it as the "average" annual return, though actual year-by-year returns may vary widely.
- Total growth: The cumulative percentage change from beginning to end, without annualizing. A 100% total growth over 10 years sounds impressive but works out to only about 7.2% CAGR.
- Dollar change: The absolute difference between ending and beginning values. This is the raw gain or loss before considering the time frame or compounding.
How This Calculator Works
You enter a beginning value, an ending value, and the number of years between them. The tool applies the standard CAGR formula: (Ending / Beginning)^(1/Years) − 1. It also computes total percentage growth and dollar change. CAGR assumes smooth compounding and ignores any interim deposits, withdrawals, or volatility — it is a backward-looking summary metric, not a forward prediction.
Quick Questions
Is CAGR the same as average annual return?
Not exactly. CAGR is a geometric mean that accounts for compounding, while a simple arithmetic average of yearly returns can be misleading. CAGR tells you the single steady rate that would produce the same end result — it is generally more useful for comparing investments.
Can I use CAGR for revenue growth?
Yes. CAGR is commonly used to express revenue, earnings, or user growth over multiple years. It is especially useful in pitch decks and annual reports because it normalizes uneven year-over-year changes into one comparable figure.
Why does CAGR ignore volatility?
CAGR only looks at the start and end points. Two investments can have the same CAGR but very different risk profiles. If volatility matters to you (and it usually does), pair CAGR with standard deviation or max drawdown for a fuller picture.
Does CAGR predict future returns?
No. CAGR is purely backward-looking. Past growth rates do not guarantee future performance. Use CAGR to compare historical performance, not to forecast.
What is a good CAGR for investments?
It depends on the asset class and time period. The S&P 500 has historically returned roughly 7–10% CAGR (inflation-adjusted vs. nominal) over long periods. A "good" CAGR also depends on the risk taken — higher returns typically come with higher volatility.
Sources
- SEC Investor.gov — CAGR Definition (official investor education on compound growth)
- Investopedia — CAGR (formula explanation and examples)
- Wikipedia — Compound Annual Growth Rate (mathematical definition and limitations)
Method & review
Estimate only. Results reflect your inputs and standard formulas. Double-check important decisions independently.