CAGR Calculator

How to Use the CAGR Calculator

CAGR takes a lumpy multi-year result and states it as one smooth annual rate. It is the standard way to compare growth across different time periods, and it works for anything that grows: an investment, revenue, a subscriber count, a city's population.

1. Enter the beginning value. Whatever the figure was at the start of the period.
2. Enter the ending value. The same measure at the end. Keep the units consistent — do not compare a gross figure with a net one.
3. Enter the number of years. Decimals are fine. Be careful here: the period from the start of 2018 to the start of 2026 is eight years, not nine.
4. Read the doubling time. The last tile converts the rate into something intuitive — at 13.7% a year, the value doubles roughly every 5.4 years.

The table projects the smooth path the CAGR implies. Comparing it against what actually happened is instructive: the smooth line usually looks nothing like the real one, and that difference is exactly what CAGR hides.

CAGR Formula

One equation, and it is the same one behind annualised investment returns.

The last rearrangement is worth keeping. It lets you project forward: if you believe a business will keep growing at its historical CAGR, multiply today's figure by (1 + CAGR) to the power of however many years you are looking ahead.

Example

$15,000 growing to $42,000 over eight years

1. Growth multiple: 42,000 ÷ 15,000 = 2.8000.
2. Total growth: (2.8 − 1) × 100 = 180%.
3. Take the eighth root: 2.8^1/8 = 1.137352.
4. Subtract one: 13.7352% a year.
5. Check it: 15,000 × 1.137352⁸ = $42,000. The rate reproduces the result exactly, which is what makes it the compound annual growth rate rather than an average.
6. Doubling time: ln(2) ÷ ln(1.137352) = 5.39 years.

The same 180% over four, eight and twelve years

Three very different investments, one identical headline. The four-year case is extraordinary; the twelve-year case is roughly what a broad equity index has historically delivered. Total growth without a period attached tells you nothing.

What CAGR Hides

CAGR's strength and its weakness are the same thing: it smooths. It describes the constant rate that would have produced the observed result, and says nothing about how the journey felt.

Both paths have a CAGR of 13.74%. Only one of them was survivable if you needed the money in year two, or if you were adding to it monthly, or if you had a temperament. CAGR is silent on all three.

The practical consequence: use CAGR to compare outcomes, and use something else — standard deviation, maximum drawdown, a chart — to judge risk. The standard deviation calculator gives the simplest version of that second number.

One more subtlety. Because CAGR depends entirely on the two endpoints, it is extremely sensitive to which dates you pick. Measuring an index from the bottom of a crash to the top of a boom produces a spectacular CAGR that describes the choice of dates more than the asset.

A simple discipline defends against this: quote CAGR over several windows at once. Three years, five years and ten years side by side reveal whether a growth story is durable or an artefact of one good period. If the three-year figure is double the ten-year figure, something changed recently and the interesting question is what, rather than what the rate was.

Where CAGR Should and Should Not Be Used

Where CAGR should and should not be used.

Use it for: comparing investments held for different periods, stating business growth over several years, projecting a trend forward when you have reason to think it continues, and converting any 'total growth' claim into something meaningful.

Do not use it for: anything where money went in or out along the way. CAGR assumes a single starting sum and a single ending sum. If you contributed monthly, the investment return calculator handles it properly by folding contributions into the invested base first.

Do not use it for: values that can be zero or negative. Profit that went from −$50,000 to $200,000 has no meaningful CAGR, and any figure a spreadsheet produces for it will be nonsense.

Be honest about the endpoints. If you are quoting a CAGR to someone else, state the start and end dates prominently. A five-year CAGR from a favourable starting point is a real number and a misleading claim.

For a rate applied to money that is compounding forward rather than backward, the compound interest calculator is the tool — CAGR tells you the rate that happened, compound interest tells you what a rate will do.

One last practical note about periods shorter than a year. CAGR still works — enter 0.5 for six months and the tool annualises correctly — but annualising a short period magnifies whatever happened in it. A 12% gain over six months annualises to 25.4%, which is arithmetically right and rarely a fair description of what the next twelve months will hold. Treat sub-annual CAGRs as arithmetic rather than as forecasts.

And if the figure you are growing is a count rather than money — subscribers, users, units shipped — everything on this page still applies. CAGR does not care what the units are, only that the beginning value is positive and the two measurements are of the same thing.

Two habits are worth adopting whenever you quote one. State the window — "13.7% a year from 2018 to 2026" is a claim someone can check, while "13.7% CAGR" is not. And pair it with the absolute change, because a spectacular rate on a tiny base is a different achievement from a modest rate on a large one, and the percentage alone cannot tell them apart.

If you are comparing several options at once, run each through this calculator with the same start and end dates and put the rates in a column. It takes a minute and it removes the single most common source of confusion in growth comparisons: different periods being quoted as though they were the same.