What is the CAGR of my investment?
Find the steady yearly growth rate between a start value and an end value, or the end value, start value, or time from the other three.
- CAGR
- 14.87%
Going from $1,000.00 to $2,000.00 over 5 years is a compound annual growth rate of 14.87%.
- Total change
- $1,000.00
- Total change (%)
- 100%
CAGR: 14.87%. Going from $1,000.00 to $2,000.00 over 5 years is a compound annual growth rate of 14.87%.
CAGR by period
The results are estimates for information only. They are not financial, tax, or legal advice. Check the numbers with your lender or a qualified professional before you decide. Terms of use
How to calculate
Computes the compound annual growth rate (CAGR) between a start and an end value over a period, or solves for the start, end, or period.
Example with the default inputs (Start value $1,000.00, End value $2,000.00, Period 5, Period in years): Going from $1,000.00 to $2,000.00 over 5 years is a compound annual growth rate of 14.87%.
Formula: CAGR = (End ÷ Start)^(1/n) − 1, where n is the period in years (months ÷ 12).
- Growth is the same every year and compounds once a year; part years use the same power.
- A period in months is months ÷ 12 years.
- Money added or taken out during the period is not included; only the start and end values count.
Worked examples
Each example is checked against the calculator on every build.
- Start value $1,000.00, End value $2,000.00, Period 5, Period in years gives CAGR 14.869835%, Total change $1,000.00, Total change (%) 100%.Source: The compound growth formula A = P(1 + r)^n (SEC Investor.gov) solved for r: (End ÷ Start)^(1/n) − 1
- Start value $5,000.00, End value $4,000.00, Period 3, Period in years gives CAGR -7.168223%, Total change (%) -20%.
- Start value $1,000.00, End value $1,500.00, Period 18, Period in months gives CAGR 31.03707%.
- Start value $1,000.00, End value $2,000.00, CAGR 10%, Period in years gives Period 7.272541.
- Start value $1,000.00, CAGR 10%, Period 3, Period in years gives End value $1,331.00.
- Start value $1,000.00, End value $1,250.00, Period 1, Period in months gives CAGR 1,355.191523%, Total change (%) 25%.
- End value $1,331.00, CAGR 10%, Period 3, Period in years gives Start value $1,000.00.
How CAGR is worked out
The compound annual growth rate (CAGR) is the steady yearly rate g that turns a start value S into an end value E over n years:
E = S × (1 + g)^n, so g = (E ÷ S)^(1/n) − 1
A period in months is n = months ÷ 12 years, so 18 months is 1.5 years. The “Period in” switch says how the number in the Period box is meant: switching it keeps the typed number and reads it in the new unit (5 years becomes 5 months). It does not convert the number.
Fill any three of the four boxes and the calculator finds the fourth:
- End value: E = S × (1 + g)^n.
- Start value: S = E ÷ (1 + g)^n.
- Period in years: n = ln(E ÷ S) ÷ ln(1 + g). There is no answer at 0% growth unless the values are equal. A period of 0 or less has no answer (for example growth of +10% from $5,000 down to $4,000).
- The CAGR can be any rate above −100%, with no upper limit. A short period gives a large yearly rate: 25% growth in 1 month is 1,355.19% a year.
- When the start value is so small next to the end value that the change in percent is too large for the computer to hold, there is no answer.
The calculator also shows the total change, E − S, and the total change in percent, (E − S) ÷ S × 100.
Assumptions
- Start and end values are above 0.
- Growth compounds once a year, and part years use the same power.
- Money added or taken out during the period is not counted. For those, use the IRR calculator.
Worked examples by hand
$1,000 grows to $2,000 in 5 years. g = 2^(1/5) − 1 = 1.148698 − 1 = 14.87%. The total change is $1,000, or 100%.
$1,000 grows to $1,500 in 18 months. n = 1.5 years, g = 1.5^(1/1.5) − 1 = 1.310371 − 1 = 31.04%.
$1,000 grows to $1,250 in 1 month. n = 1 ÷ 12 year, g = 1.25^12 − 1 = 14.551915 − 1 = 1,355.19%.
$5,000 falls to $4,000 in 3 years. g = 0.8^(1/3) − 1 = 0.928318 − 1 = −7.17%. The total change is −20%.
How long does $1,000 take to double at 10%? n = ln 2 ÷ ln 1.1 = 0.693147 ÷ 0.095310 = 7.27 years.
$1,000 growing at 10% for 3 years. E = 1,000 × 1.1^3 = $1,331.
What start value grows to $1,331 in 3 years at 10%? S = 1,331 ÷ 1.1^3 = 1,331 ÷ 1.331 = $1,000.
Other questions people ask
What is CAGR (Compound Annual Growth Rate)?
CAGR is a measure of the mean annual growth rate of an investment over a specified period longer than one year. It represents the rate of return that would be required for an investment to grow from its beginning balance to its ending balance, assuming the profits were reinvested at the end of each year of the investment's life span.
How is CAGR calculated?
CAGR is calculated using the formula: CAGR = (End Value / Start Value)^(1/n) - 1, where n is the number of years. This formula assumes that the growth rate is constant over the entire period and that all profits are reinvested.
What's the difference between CAGR and average annual return?
CAGR provides a smoothed annual rate that eliminates the volatility of periodic returns that can render arithmetic means irrelevant. Unlike average annual return, CAGR accounts for the compounding effect and provides a more accurate representation of investment performance over time.
When should I use CAGR?
CAGR is useful for comparing investments over different time periods, analyzing business growth rates, evaluating investment performance, and making long-term financial projections. It's particularly valuable when comparing investments with different time horizons.
What are the limitations of CAGR?
CAGR assumes a constant growth rate over the entire period, which rarely happens in reality. It doesn't account for volatility, risk, or the timing of cash flows. CAGR also doesn't reflect the actual year-by-year performance, only the average annual growth rate.
Can CAGR be negative?
Yes, CAGR can be negative if the end value is less than the start value. A negative CAGR indicates that the investment or metric has decreased over the specified period, representing a loss rather than growth.
How do I interpret CAGR results?
A higher CAGR indicates faster growth. For example, a CAGR of 10% means the value grew by an average of 10% per year. Compare CAGR to benchmarks like market indices, inflation rates, or other investments to assess relative performance.
What's the difference between months and years in CAGR calculation?
When using months, the calculator automatically converts the period to years by dividing by 12. This allows for more precise calculations when dealing with periods shorter than a year. The CAGR formula always uses years as the time unit.
How accurate is CAGR for investment analysis?
CAGR provides a useful snapshot of average annual growth but should be used alongside other metrics like volatility, Sharpe ratio, and maximum drawdown for comprehensive investment analysis. It's best for comparing investments over similar time periods.
Can I use CAGR for non-financial metrics?
Yes, CAGR can be applied to any metric that changes over time, such as revenue growth, user growth, market share, or any other business or economic indicator that you want to analyze for consistent growth patterns.