What CAGR tells you
CAGR (compound annual growth rate) is the steady yearly rate that takes a value from its start to its end over a period: CAGR = (ending ÷ beginning)1/years − 1. Growing $10,000 to $20,000 in 5 years is a CAGR of (20,000 ÷ 10,000)1/5 − 1 = about 14.87% a year, even though the total growth is 100%.
How to use this calculator
Enter the beginning value, the ending value, and the number of years between them. The result shows the compound annual growth rate plus the total growth over the period. It works for investments, revenue, users, or any figure that grows over time. Apply the rate forward to a balance with the future value calculator.
Why CAGR beats a simple average
CAGR smooths out the ups and downs into one constant rate, which is why it's better than averaging yearly percentages. Two investments can both grow 100% in total, but the one that took 3 years (26% CAGR) outperformed the one that took 7 years (10.4% CAGR). CAGR makes that comparison fair. For a single-period gain instead of an annualized one, use the ROI calculator.
CAGR for doubling money
Here's the CAGR needed to double a value over different periods:
| Years to double | CAGR |
|---|---|
| 3 years | 26.0% |
| 5 years | 14.9% |
| 7 years | 10.4% |
| 10 years | 7.2% |
What CAGR doesn't show
CAGR assumes smooth growth and hides volatility — the actual path may have had losing years. It also ignores cash added or withdrawn along the way. For a forward-looking savings rate that includes compounding frequency, use the APY calculator; for a single-period change, the year-over-year growth calculator. This is for information only, not investment advice.
Frequently asked questions
- How do I calculate CAGR?
- Divide the ending value by the beginning value, raise the result to the power of 1 divided by the number of years, then subtract 1. ($20,000 ÷ $10,000)^(1/5) − 1 ≈ 14.87%.
- What is the CAGR from $10,000 to $20,000 in 5 years?
- About 14.87% per year, even though the total growth is 100%.
- Is CAGR the same as average annual return?
- No. CAGR is the compounded rate that smooths growth into one figure, while a simple average of yearly returns ignores compounding and can overstate performance.
- Can CAGR be negative?
- Yes. If the ending value is lower than the beginning value, CAGR is negative, showing an average yearly decline.
- Does CAGR account for volatility?
- No. It assumes smooth growth and hides the year-to-year swings, so two investments with the same CAGR can have very different risk.