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CAGR Calculator

Calculate the Compound Annual Growth Rate (CAGR), absolute dollar gain, and total percentage return across any investment horizon.

Reviewed for Mathematical Accuracy Last updated: 2026
Doubling in 5 Yrs ($10k → $25k) Index Fund 10 Yrs ($50k → $180k) Startup Revenue 3.5 Yrs ($100k → $500k)
$
$
%
COMPOUND ANNUAL GROWTH RATE
20.11%
Real Return (After 3.0% Inflation): 16.61%
$15,000.00
Total Absolute Gain
+150.00%
Total Return
3.79 yrs
Rule of 72 Doubling Time
Beginning Capital $10,000.00
Ending Capital $25,000.00
Investment Horizon 5.00 Years (60 Months)
Annual Multiplier 1.2011× per year
Year Simulated Portfolio Balance Annual Value Gain
Financial Disclaimer: Calculations and projections displayed are for educational and scenario planning purposes only. They do not constitute formal investment advice, loan commitments, or credit approval. Market-linked returns fluctuate, and lender terms vary. Consult a qualified financial advisor before executing financial agreements.

What is Compound Annual Growth Rate (CAGR)?

The Compound Annual Growth Rate (CAGR) is the constant annual rate at which an investment would have grown had it compounded at a steady pace from its initial value to its ending balance. Unlike simple arithmetic returns, CAGR eliminates volatility distortion, providing a standardized geometric benchmark to compare mutual funds, private equity portfolios, real estate appreciation, and corporate revenue trends.

For deeper analysis and related planning, you can also explore our SIP Calculator and Retirement / Investment Calculator.

The Mathematical CAGR Formula

CAGR = (Ending Value / Beginning Value)^(1 / n) - 1

Where n represents the total elapsed time in years (including fractional years for months: Years + Months/12).

Arithmetic Average vs. Geometric CAGR

Metric Mathematical Nature Accounting for Volatility Best Analytical Use
Arithmetic Mean Simple sum of annual % divided by years Flawed: severely overstates volatile returns One-period probability forecasting
Geometric CAGR Compounded $n$-th root of total wealth ratio Accurate: reflects exact realized cash ending Evaluating multi-year actual investment performance

Adjusting for Real Inflation Rate

Nominal CAGR ignores inflation. Over long multi-year horizons, a 10% nominal CAGR during a 6% inflation environment only delivers approximately 3.77% real purchasing power growth. Real CAGR is calculated via the Fisher equation:

Real CAGR = [(1 + Nominal CAGR) / (1 + Inflation Rate)] - 1

Frequently Asked Questions

What is CAGR and how is it calculated?

Compound Annual Growth Rate (CAGR) measures the geometric annualized growth rate of an investment over a specified time horizon. Formula: CAGR = (Ending Value / Beginning Value)^(1 / Years) - 1.

Why is CAGR better than simple average return?

Simple arithmetic average returns distort the compounding effect of volatility. For example, if a portfolio gains 100% in Year 1 and drops 50% in Year 2, the arithmetic mean is +25%, but the true CAGR is exactly 0% (the portfolio ended where it started).

What is the difference between nominal CAGR and real CAGR?

Nominal CAGR measures raw dollar growth without adjusting for purchasing power loss. Real CAGR deducts annual inflation to show true real-wealth expansion.

Financial Note: CAGR assumes smooth, uninterrupted compounding. Real-world asset returns experience drawdown swings, sequence of return risk, and intermediate cash deposits or withdrawals. Past performance measured via CAGR does not guarantee future financial yields.

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