CAGR Calculator
Calculate compound annual growth rate (CAGR) of an investment over time.
| Scenario | Profile | Compound Annual Growth Rate (CAGR) |
|---|---|---|
Base Settings | Default inputs and growth assumptions | 20.11% |
Conservative | Lower yield, higher inflation, haircuts | 17.61% |
Optimistic | Favorable yield, lower inflation, growth | 22.42% |
Stress Test | Severe economic crash and high inflation | 11.84% |
Educational estimate. Not financial advice.
Annualized growth of 20.11% is substantially above typical long-term historical equity averages under S&P 500 Historical Averages.
An asset compounding from $10,000 to $25,000 over 5.0 years has a nominal CAGR of 20.11%. After adjusting for tax (15%) and inflation (0%), the real annual return is 17.87%.
How to Use the CAGR Calculator
Smooth out the annual volatility of your investments with our free CAGR calculator. The Compound Annual Growth Rate (CAGR) represents the annualized rate at which an investment would grow if it grew at a steady rate over a set period. Input your initial investment value, ending value, and time horizon to find your exact annualized growth rate.
- Scenario Mode: Scenario Mode
- Goal to Calculate: Goal to Calculate
- Initial Value ($): Initial Value ($)
- Ending Value ($): Ending Value ($)
- Target CAGR Goal (%): Target CAGR Goal (%)
- Duration (Years): Duration (Years)
- Adjust for Inflation: Adjust for Inflation
- Annual Inflation Rate (%): Annual Inflation Rate (%)
- Effective Tax Rate (%): Effective Tax Rate (%)
What Is CAGR? Compound Annual Growth Rate Formula
Understand Compound Annual Growth Rate, how it differs from average return, and how to calculate smoothed annual growth yields.
Read Full Guide →CAGR vs XIRR: Calculating Investment Returns & Irregular Cash Flows
Compare Compound Annual Growth Rate vs Extended Internal Rate of Return for steady vs irregular transaction scenarios.
Read Full Guide →What is the formula for calculating CAGR?
The formula for CAGR is: CAGR = (Ending Value / Beginning Value)^(1/t) - 1, where t is the time period in years.
Why is CAGR preferred over simple average returns?
Simple average returns do not account for compounding and can distort true investment performance, especially with highly volatile assets. CAGR provides a single, annualized growth figure that represents the actual geometric progression of your capital.
What are the limitations of CAGR?
CAGR assumes a constant rate of growth over the investment horizon, ignoring real-world volatility and interim cash inflows or outflows. It is an analytical comparison tool, not a reflection of year-to-year returns.
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