CAGR Calculator – Find the Real Yearly Growth Rate of Any Investment
When an investment grows from one value to another over several years, the headline number most people want is "how much did it grow per year?" The honest answer is the Compound Annual Growth Rate (CAGR): the single, constant yearly rate that would have turned the starting value into the ending value. This CAGR calculator works that out instantly, can solve the same formula for the ending value, the starting value or the time needed, and also analyses a year-by-year series to show why CAGR and the "average annual return" are different numbers.
The CAGR formula with a worked example
With a beginning value B, an ending value E and a period of n years, the formula is CAGR = (E ÷ B)^(1 ÷ n) − 1. Suppose 10,000 grows to 25,000 in five years. The growth multiple is 2.5×, and 2.5^(1/5) − 1 gives 20.11% per year. Compounding at that rate produces 12,011.24 after one year, 14,427.00 after two, 17,328.62, 20,813.83 and finally 25,000.00, which is exactly the path the growth chart draws.
The formula can be rearranged to answer other questions. The future value is E = B × (1 + r)^n, so 10,000 at 12% for ten years becomes 31,058.48. The required starting amount is B = E ÷ (1 + r)^n, and the time to reach a target is n = ln(E ÷ B) ÷ ln(1 + r); tripling money at 15% a year takes about 7.86 years. The period can be entered as years and months or as two calendar dates, in which case the exact day count is divided by 365.25.
Why an arithmetic average overstates returns
Take an investment that goes from 100 to 150 (+50%), falls to 90 (−40%) and recovers to 135 (+50%). The arithmetic average return is (50 − 40 + 50) ÷ 3 = 20%, yet the money only grew 35% in three years, which is a CAGR of 10.52%. The gap exists because percentage changes compound on different bases: a 40% loss needs a 66.7% gain just to break even. This effect is often called volatility drag, and the more returns swing from year to year, the further the simple average drifts above what an investor actually earned. CAGR is the geometric mean of the yearly growth factors, so it always reflects the real outcome.
When to use CAGR and when to use XIRR
CAGR describes a single lump sum that sat untouched between two dates. It is ideal for comparing the growth of a stock price, a company's revenue, a property value or a one-time investment over different periods. It breaks down as soon as money moves in or out along the way. For a SIP, regular top-ups or partial withdrawals, use a money-weighted return such as XIRR, which discounts every cash flow by its own date. Using CAGR on a portfolio that received deposits will overstate its performance, because the new money is counted as growth.
Adjusting CAGR for inflation
A nominal CAGR tells you how the number grew, not what it can buy. To find the real CAGR, use the Fisher relation (1 + r) ÷ (1 + i) − 1, where i is the average inflation rate. A 20.11% nominal CAGR with 6% inflation is a real CAGR of 13.31%, not the 14.11% you would get by simple subtraction, because inflation erodes the gains as well as the original amount.
46.41%, which assumes the same pace continues for a full year. Treat short-period CAGRs as illustrations rather than expectations.Reading the results
Alongside the rate, the calculator shows the absolute change, total return, growth multiple and the exact doubling time ln 2 ÷ ln(1 + r), with the familiar Rule of 72 estimate for comparison. A negative CAGR shows the halving time instead. The rate gauge places the result against rough, illustrative bands, and the year-by-year table lets you see how the gains accelerate as compounding builds on itself.