CAGR Calculator
Calculate Compound Annual Growth Rate, project future value with Reverse CAGR, or find the required growth rate to hit your target.
CAGR
20.11%
Total Growth
150.0%
Profit
$15,000
Historical Growth Path
At 20.11% CAGR over 5 years
Year-by-year breakdown
| Year | Value | Growth |
|---|---|---|
| Year 0 | $10,000 | — |
| Year 1 | $12,011 | +20.1% |
| Year 2 | $14,427 | +44.3% |
| Year 3 | $17,329 | +73.3% |
| Year 4 | $20,814 | +108.1% |
| Year 5 | $25,000 | +150.0% |
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What is CAGR — Compound Annual Growth Rate?
CAGR — Compound Annual Growth Rate — is the rate at which an investment would have grown if it grew at a steady rate compounded annually. It is one of the most widely used metrics in finance because it smooths out the volatility of year-by-year returns and gives you a single, comparable number.
For example, if a stock portfolio was worth $10,000 in 2019 and grew to $18,000 by 2024, it did not necessarily grow by the same amount each year. CAGR tells you what consistent annual return would have produced that same result — in this case, approximately 12.4% per year.
CAGR is used by investors to compare funds, by businesses to measure revenue growth, and by analysts to evaluate the performance of any asset over time. It strips away the noise and gives you a clean, annualized picture of growth.
CAGR Formula & Reverse CAGR Formula
This calculator handles three versions of the same core formula — each solving for a different unknown. Understanding all three gives you complete control over your investment analysis.
1. Calculate CAGR — Find the growth rate
CAGR = (Final Value ÷ Initial Value)^(1÷Years) − 1
Use when: You know start and end values and want to find the annualized return rate.
Example: $10,000 → $25,000 in 5 years = CAGR of 20.11%
2. Reverse CAGR — Find the future value
Future Value = Initial Value × (1 + CAGR)^Years
Use when: You know your starting amount and expected growth rate, and want to project what you'll have.
Example: $10,000 at 10% CAGR for 20 years = $67,275
3. Required CAGR — Find the needed rate
Required CAGR = (Target ÷ Initial)^(1÷Years) − 1
Use when: You have a financial goal and want to know what annual return you need to achieve it.
Example: Need $500,000 in 15 years from $100,000 → need 11.18% CAGR
What Is Reverse CAGR — And When Do You Need It?
Reverse CAGR works backwards from the standard formula. Instead of finding the growth rate from known start and end values, you already know the growth rate and use it to find either the future value or the required starting point.
This is incredibly useful for financial planning. If your index fund has historically delivered 10% CAGR and you invest $20,000 today — reverse CAGR tells you exactly what that investment will be worth in 10, 15, or 20 years. No guesswork.
Retirement Planning
You have $80,000 saved and your portfolio averages 8% CAGR. Use reverse CAGR to see if you'll have enough by retirement age — and if not, how much more you need to contribute.
Education Fund
Your child is 5 years old and you need $100,000 for college in 13 years. Invest $35,000 today at what CAGR? Reverse CAGR tells you the required return — then you decide if that's realistic.
Business Valuation
A startup valued at $2M today expects to reach $20M in 5 years. That's a 58.5% CAGR. Reverse CAGR helps investors assess whether that growth assumption is reasonable.
Real Estate ROI
Bought a property for $250,000. At 6% CAGR — what will it be worth in 10 years? Reverse CAGR gives you $447,712 — helping you decide if the investment meets your goals.
CAGR Benchmarks — What Is a Good CAGR?
| Asset Class | Typical CAGR | Risk Level |
|---|---|---|
| Savings Account / HYSA | 3–5% | Very Low |
| Government Bonds / Gilts | 3–6% | Low |
| S&P 500 Index (historical avg) | ~10% | Medium |
| FTSE 100 (historical avg) | ~7% | Medium |
| Real Estate | 5–10% | Medium |
| Individual Stocks | Variable | High |
| Venture Capital / Startups | 15–25% | Very High |
| Cryptocurrency | Highly Variable | Extreme |
🇮🇳 For Indian Investors
Nifty 50 has delivered approximately 12–14% CAGR over the last 20 years. PPF offers ~7.1% government-guaranteed CAGR. Sensex long-term CAGR has been around 15% since inception.
CAGR vs Other Return Metrics
CAGR
✓ Smooths volatility, easy to compare across investments and time periods
✗ Assumes steady growth — masks year-by-year volatility and drawdowns
Absolute Return
✓ Simple — just total % gain from start to end, no time adjustment
✗ Useless for comparing investments of different durations
IRR
✓ Accounts for irregular cash flows — SIPs, dividends, partial withdrawals
✗ Complex to calculate manually, requires spreadsheet or financial calculator
Quick Rule of Thumb — The Rule of 72
Divide 72 by your CAGR to estimate how many years it takes to double your money. At 8% CAGR → doubles in 9 years. At 12% CAGR → doubles in 6 years. At 4% CAGR → doubles in 18 years.
Frequently Asked Questions
❓ What is Reverse CAGR and how is it different from regular CAGR?
Regular CAGR finds your growth rate from known start and end values. Reverse CAGR works backwards — you already know the rate and use it to project a future value. For example, if your mutual fund delivers 12% CAGR and you invest $15,000 today, reverse CAGR tells you that investment will be worth $48,231 in 10 years. Both use the same formula, just solving for different unknowns.
❓ Can CAGR be negative?
Yes. If your investment lost value over the period, CAGR will be negative. For example, if $10,000 fell to $6,000 over 5 years, the CAGR is approximately -9.5% per year. This is useful for quantifying losses just as it quantifies gains — especially when comparing two underperforming assets.
❓ Is CAGR the same as annual return?
Not exactly. Annual return refers to the return in a specific calendar year. CAGR is a smoothed average that tells you what consistent yearly return would produce the same overall result. A fund might return 30% one year and -5% the next, but its 2-year CAGR reflects the net outcome — around 11.4%.
❓ Why do mutual funds advertise CAGR instead of absolute returns?
Because CAGR makes long-term performance comparable and honest. A fund saying it returned 200% sounds extraordinary — but over 20 years that is only about 5.6% CAGR, which is below inflation in many countries. CAGR gives investors a clear, time-adjusted picture that absolute returns cannot.
❓ What is a realistic CAGR to use for retirement planning?
Most financial planners recommend using 6–8% CAGR for long-term retirement projections in developed markets — conservative enough to account for bad decades, realistic enough to be achievable. The S&P 500 has returned ~10% historically but using that full number ignores inflation (3%) and sequence-of-returns risk. 6–7% in real terms is a safer planning assumption.
❓ Does CAGR account for dividends?
Only if you include dividends in your final value. To get total return CAGR (capital gains + dividends reinvested), use the Total Return value as your Final Value input — not just the price. Many index fund providers publish both price return and total return CAGR figures for exactly this reason.