CAGR Calculator
Calculate the Compound Annual Growth Rate of any investment or business metric. Solve for CAGR, future value, or time horizon — three modes using the same underlying formula. Includes historical benchmarks so you can see how your numbers compare to the S&P 500 and other standard yardsticks.
Last updated: April 2026
The CAGR formula explained
Worked example. $10,000 invested grows to $25,000 over 10 years. CAGR = (25,000 / 10,000)^(1/10) - 1 = 2.5^0.1 - 1 = 1.0959 - 1 = 0.0959 or 9.59% CAGR.
What does 9.59% CAGR mean? It means if the investment had grown at a perfectly smooth 9.59% every year, it would have produced the exact same final value. The actual path might have been +20% / -5% / +15% / -10% / +25% / +2% / +11% / -8% / +18% / +14% — averaging out to 9.59% compounded. CAGR smooths the bumpy reality into a single number you can compare across investments.
Why not just use the average return? Because average return overstates actual growth when returns are volatile. Example: +50% year 1, -50% year 2. Simple average: 0%. But $100 → $150 → $75 — you actually lost 25%. CAGR of that series is -13.4%, which correctly captures the real outcome. Always use CAGR, not arithmetic average, for investment comparisons.
Historical CAGR benchmarks
| Asset | Nominal CAGR | Real CAGR | Notes |
|---|---|---|---|
| S&P 500 (1928-2024) | ~10% | ~7% | With dividends reinvested |
| 60/40 Portfolio | ~8% | ~5% | Classic balanced portfolio |
| US Treasury Bonds (long) | ~5% | ~2% | 10-year treasury long run |
| Berkshire Hathaway (1965-2024) | ~19.8% | ~16% | Buffett's legendary track record |
| US Housing (Case-Shiller) | ~4% | ~1% | Price appreciation only, no rent |
| Gold (1970-2024) | ~7% | ~3% | Highly dependent on start date |
| High-yield savings account | ~2% | ~-1% | Typically loses real purchasing power |
Historical averages across long periods. Actual returns vary by start/end date selection and are not guaranteed to repeat.
Common CAGR examples by growth multiple
| Growth | 5 years | 10 years | 20 years | 30 years |
|---|---|---|---|---|
| Double (2x) | 14.87% | 7.18% | 3.53% | 2.34% |
| Triple (3x) | 24.57% | 11.61% | 5.65% | 3.73% |
| 5x | 37.97% | 17.46% | 8.38% | 5.51% |
| 10x | 58.49% | 25.89% | 12.20% | 7.98% |
| 100x | 151.19% | 58.49% | 25.89% | 16.59% |
The same "10x" return is a 58% CAGR over 5 years but only an 8% CAGR over 30 years. Always pair growth with time horizon.
Frequently asked questions
What is CAGR?
CAGR stands for Compound Annual Growth Rate. It is the constant annual rate of growth that would take an investment from its beginning value to its ending value over a specified time period, if growth had been perfectly smooth. Real investment returns are bumpy year to year — CAGR smooths them into a single equivalent rate that makes comparison across investments and time periods possible. It is the standard way professionals report investment performance.
What is the CAGR formula?
CAGR = (End Value / Begin Value)^(1 / years) - 1. Example: $10,000 grows to $25,000 over 10 years. CAGR = (25,000 / 10,000)^(1/10) - 1 = 2.5^0.1 - 1 = 1.0959 - 1 = 0.0959 = 9.59%. The exponent (1/years) is the key. The larger the exponent (shorter time), the smaller the CAGR for the same total return. Make sure you count the years correctly — from the beginning of year 1 to the end of year 10 is 10 years of growth.
What is a good CAGR for investments?
Historical benchmarks: the S&P 500 has averaged a roughly 10% nominal CAGR / 7% real CAGR over the past century. A 60/40 stock/bond portfolio has averaged about 8% nominal / 5% real. Bonds alone have averaged 4-5%. Warren Buffett's Berkshire Hathaway has averaged roughly 19-20% CAGR from 1965 through 2024 — legendary territory that virtually no other investor has sustained. Any investment claiming sustained 20%+ CAGR is either taking enormous risk or misrepresenting returns.
What is the difference between CAGR and average annual return?
Average annual return is the arithmetic mean of yearly returns: add up each year's return and divide by the number of years. CAGR is the geometric mean: the constant rate that would produce the same final value with smooth compounding. They give different numbers when returns are volatile. Example: +50% year 1, -50% year 2. Average: 0%. CAGR: -13.4% (you end with 75% of your starting value). CAGR is always lower than or equal to the average for any volatile return series. Always use CAGR, not average, for comparing investments.
Can CAGR be negative?
Yes. If the ending value is less than the beginning value, CAGR is negative. Example: $10,000 drops to $7,500 over 3 years. CAGR = (7,500/10,000)^(1/3) - 1 = -9.14%. This means a constant -9.14% annual return would have produced the same total loss. Negative CAGR is common for short time periods or for investments that happened to underperform.
Is CAGR the same as IRR?
Not quite. CAGR is used when there are no cash flows in or out during the holding period — just a beginning and ending value. IRR (Internal Rate of Return) handles irregular cash flows at different times, solving for the rate that makes the net present value of all cash flows equal zero. For a simple buy-and-hold investment, CAGR and IRR produce the same answer. For investments with additional contributions or withdrawals, use IRR or the Modified Dietz method instead.
How does CAGR handle inflation?
CAGR by itself is nominal — it does not account for inflation. To get the real CAGR (inflation-adjusted), use: Real CAGR = (1 + nominal CAGR) / (1 + inflation rate) - 1. Example: 10% nominal CAGR with 3% inflation = 6.80% real CAGR. For long-term planning, always use real CAGR so projections reflect actual purchasing power. Nominal returns overstate long-term outcomes because they do not account for the decline in what a dollar buys.
What is a limitation of CAGR?
CAGR hides volatility. Two investments with the same 10% CAGR over 10 years can have completely different risk profiles. One might have gone smoothly at roughly 10% per year; the other might have swung from -40% to +60% in various years. CAGR does not capture that journey — only the start and end points. Always pair CAGR with a measure of volatility (like standard deviation or maximum drawdown) for a complete picture of investment quality.
How is CAGR used in business?
Beyond investing, CAGR is widely used to measure growth in revenue, customer count, active users, market size, or any other metric that grows over time. A SaaS company might report "30% CAGR in ARR over the past 3 years" meaning their annual recurring revenue has compounded at 30% per year. Market research reports often use CAGR to describe expected industry growth ("the global EV market is projected to grow at 18% CAGR through 2030"). Same formula, different application.
Does CAGR account for dividends?
It depends on how you measure the ending value. If the ending value includes reinvested dividends, then yes — CAGR reflects total return including dividends. If the ending value is only the price, then CAGR reflects price appreciation alone. Always clarify which one you're measuring. Standard practice for stock indices is to quote total return CAGR (with dividends reinvested), which is higher than price-only CAGR. The S&P 500's ~10% long-term figure includes dividends.
How many years should I use to calculate CAGR?
Use the actual holding period. For investment comparisons, longer periods give more reliable CAGR estimates because they smooth out short-term volatility. A 1-year CAGR can be wildly different from a 20-year CAGR for the same investment. Professional analysts typically report 3-year, 5-year, and 10-year CAGRs to show both short and long-term performance. For meaningful comparison to historical averages, use at least 5-10 years.
What is the rule of 72 and how does it relate to CAGR?
The Rule of 72 is a quick shortcut for estimating how long it takes money to double at a given CAGR. Divide 72 by the CAGR (as percent). At 9% CAGR, money doubles in 72/9 = 8 years. At 6% it doubles in 12 years. At 12% it doubles in 6 years. The rule works because ln(2) ≈ 0.693 and 72 is conveniently divisible by many common rates. Use it for mental math when you do not have a calculator — it is accurate for rates between about 5% and 15%.
Methodology: Uses standard CAGR formula (End/Begin)^(1/years) - 1. Historical benchmarks sourced from Damodaran NYU Stern dataset for S&P 500 returns, Berkshire Hathaway annual reports, Federal Reserve FRED data for bonds, and Case-Shiller index for housing.
Last updated: April 2026.
Disclaimer: This calculator provides estimates for educational purposes only and is not investment advice. Past performance does not predict future results.