CAGR Calculator (Compound Annual Growth Rate)
Enter a beginning value, ending value, and time period to find the annualized growth rate. Then use the second tool to project future value from any annual rate.
Future Value from Annual Growth Rate
What is compound growth rate?
Compound growth rate tells you the constant annual rate that would take a value from a starting amount to an ending amount over a set period. In investing, business analysis, and personal finance, this is commonly called CAGR (Compound Annual Growth Rate).
Think of CAGR as the “smoothed” yearly return. Real returns jump up and down from year to year, but CAGR provides one clean annual figure you can use to compare options.
The formula
The standard CAGR equation is:
CAGR = (Ending Value / Beginning Value)^(1 / Years) - 1To convert CAGR to a percentage, multiply by 100. For example, if CAGR = 0.072, the annual growth rate is 7.2%.
How to use this calculator
1) Find CAGR from start and end values
- Enter your beginning value (initial investment, revenue, users, etc.).
- Enter the ending value after a specific period.
- Enter the number of years.
- Click Calculate CAGR.
2) Project future value from a growth rate
- Enter your current value.
- Enter an annual growth rate as a percentage.
- Enter years into the future.
- Click Calculate Future Value.
Why CAGR is useful
- Investment comparison: Compare stocks, index funds, real estate, or business ventures with one consistent metric.
- Business forecasting: Evaluate revenue growth or customer growth over time.
- Goal planning: Estimate how fast savings need to grow to hit a target.
- Simplification: Turn noisy year-by-year data into one understandable rate.
CAGR vs average annual return
Average annual return is just the arithmetic mean of yearly returns. CAGR is geometric and includes compounding. If returns are volatile, average annual return often overstates the true long-term growth experience.
Quick illustration
Suppose an investment gains 20% in year one and loses 10% in year two:
- Average annual return = (20% + -10%) / 2 = 5%
- Actual value path: 100 → 120 → 108
- Total 2-year gain is 8%, and CAGR is about 3.92%, not 5%
Common mistakes to avoid
- Using months but labeling as years (always keep time units consistent).
- Using negative or zero values in a standard CAGR formula (not mathematically valid in many cases).
- Ignoring inflation when comparing long time periods.
- Assuming CAGR means “guaranteed” annual performance.
Nominal growth vs real growth
CAGR from this calculator is nominal unless you adjust for inflation. A portfolio growing at 8% when inflation is 3% has roughly 5% real growth (approximate). Real growth helps you understand purchasing power over time.
Practical takeaway
Compound growth is one of the most powerful forces in finance. Small differences in annual growth rate become huge differences over long time horizons. Use this calculator to evaluate choices, set realistic targets, and make better long-term decisions.