Compound Annual Growth Rate (CAGR) Calculator

Calculate the compound annual growth rate of your investment over a specific period.

Calculator

Enter Your Investment Details

Enter the initial value of your investment.

Enter the final value of your investment.

Enter the number of years for the investment period.

Table of Contents

1 CAGR Formula
2 How to Calculate CAGR
3 Interpreting CAGR Results
4 CAGR - Practical Examples
Concept

CAGR Formula

The Compound Annual Growth Rate (CAGR) is 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.

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

Where:

  • Ending Value = The final value of the investment
  • Beginning Value = The initial value of the investment
  • n = Number of years
Steps

How to Calculate CAGR

To calculate CAGR, follow these steps:

  1. 1
    Determine the beginning value of your investment
  2. 2
    Determine the ending value of your investment
  3. 3
    Determine the number of years
  4. 4
    Divide the ending value by the beginning value
  5. 5
    Raise the result to the power of 1/n
  6. 6
    Subtract 1 from the result
Analysis

Interpreting CAGR Results

Positive CAGR

Indicates that your investment has grown over the period. The higher the CAGR, the better the investment performance.

Negative CAGR

Indicates that your investment has decreased over the period. The more negative the CAGR, the worse the investment performance.

Zero CAGR

Indicates that your investment has neither grown nor decreased over the period.

Examples

CAGR - Practical Examples

Example 1 Basic Investment

Beginning Value: $10,000
Ending Value: $15,000
Years: 5

CAGR = ($15,000 / $10,000)^(1/5) - 1 = 8.45%

Example 2 Long-term Investment

Beginning Value: $5,000
Ending Value: $20,000
Years: 10

CAGR = ($20,000 / $5,000)^(1/10) - 1 = 14.87%

Tools

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