CAGR Calculator
Calculate Compound Annual Growth Rate, project future portfolio values, solve required years, and compare asset returns.
Compound Annual Growth Rate Parameters
Standard Geometric Mean📈 Compounded Wealth Growth Trajectory
Year-Over-Year CurveYear-By-Year Amortized Schedule
Breakdown of compounding interest earned and cumulative balance per period.
| Year | Portfolio Balance | Annual Growth | Cumulative ROI |
|---|---|---|---|
| Initial | $10,000.00 | — | +0.00% |
| Year 1 | $11,247.46 | +$1,247.46 | +12.47% |
| Year 2 | $12,650.54 | +$1,403.08 | +26.51% |
| Year 3 | $14,228.64 | +$1,578.10 | +42.29% |
| Year 4 | $16,003.61 | +$1,774.97 | +60.04% |
| Year 5 | $17,999.99 | +$1,996.39 | +80.00% |
Understanding Compound Annual Growth Rate (CAGR)
Why CAGR is the Gold Standard for Investment Performance
In financial modeling and wealth management, simple arithmetic averages can be deeply misleading. For example, if a $10,000 portfolio gains 100% in Year 1 (to $20,000) and drops 50% in Year 2 (back to $10,000), the arithmetic average return is (100% - 50%) / 2 = +25% per year, even though you made zero real profit.
CAGR eliminates volatility distortion by measuring the constant geometric rate of return required to move from the initial balance to the final balance over the exact holding period.
| Metric | Formula | Best Used For |
|---|---|---|
| CAGR | ((End / Start) ^ (1 / Years)) - 1 | Multi-year buy-and-hold investments, mutual funds, real estate |
| Future Value | Start × (1 + CAGR) ^ Years | Projecting retirement targets and wealth accumulation |
| Years Needed | ln(End / Start) ÷ ln(1 + CAGR) | Determining time required to hit financial independence |
| IRR | Rate where Net Present Value (NPV) = 0 | Investments with irregular cash deposits & withdrawals |
CAGR vs IRR (Internal Rate of Return)
When an investment consists solely of an initial lump sum and a final exit without cash flows in between, CAGR and IRR are mathematically identical. However, when an investor contributes monthly or takes periodic dividend withdrawals, the Internal Rate of Return (IRR) accounts for the timing of each cash flow. Cross-reference your trade gains with our stock profit calculator, compare loan costs using the EMI calculator, or calculate split ratios with the percentage calculator.
Benchmark CAGR Returns Across Asset Classes
Comparing your investment's CAGR to historic macroeconomic benchmarks helps determine whether your risk profile is generating alpha:
• S&P 500 Index (Historical): ~10.0% nominal CAGR (7.0% inflation-adjusted over decades).
• High-Yield Savings & US Treasuries: 4.0% – 5.5% CAGR in high-rate cycles.
• Venture Capital & Early Stage Tech: 20.0% – 30.0%+ target hurdle CAGR.