CAGR Calculator: Compound Annual Growth Rate
Calculate the compound annual growth rate — the single steady yearly rate that links a starting value to an ending value.
Adjust the inputs and select Calculate for a full breakdown.
Compare Common Scenarios
How the numbers shift across typical situations for this calculator:
| Scenario | Annual growth rate | Total growth |
|---|---|---|
| 10,000 to 25,000 over 8yr | 12.14% | 150.00% |
| 5,000 to 8,000 over 5yr | 9.86% | 60.00% |
| 100,000 to 90,000 over 4yr | -2.60% | -10.00% |
| 2,000 to 12,000 over 15yr | 12.69% | 500.00% |
How This Calculator Works
Enter the starting value, the ending value, and the number of years between them. The calculator finds the constant annual rate that, compounded over those years, turns one figure into the other, and shows the total growth alongside.
The Formula
Compound Annual Growth Rate
Start is the beginning value, End is the ending value, n is the number of years
Worked Example
A value rising from 10,000 to 25,000 over 8 years has a CAGR of about 12.1%. The total growth is 150%, but CAGR restates that as the smooth yearly rate that makes periods of different lengths comparable.
Key Insight
CAGR hides volatility. Two investments with the same CAGR can have taken wildly different paths, so it is the right tool for comparing end results but a poor guide to the risk taken along the way.
CAGR vs average return — geometric vs arithmetic mean
Arithmetic mean overstates compound returns. An investment returning +50% then −50% in two consecutive years has an arithmetic average of 0% but ended at 75% of the starting value. The correct annualized return (CAGR) is −13.4%. The asymmetry between gains and losses makes geometric mean (CAGR) the only correct multi-period summary.
The general rule: arithmetic mean ≥ geometric mean (CAGR), with equality only when there's no variance. The gap between them grows with volatility — for the S&P 500 (long-run arithmetic ~12%, geometric ~10%), the gap is ~2 percentage points. For more volatile assets (small-cap stocks, emerging markets, crypto), the gap can be 5-10 percentage points.
Implication: when a fund advertises 'average annual return of 15%' over many years, check whether that's arithmetic or CAGR. Arithmetic averages systematically understate real-world investor experience. Reputable performance reporting (CFA-Institute-aligned, SEC-regulated mutual funds) uses CAGR. Marketing materials sometimes use arithmetic for flattering presentation.
What is a 'good' CAGR — benchmarks across asset classes
Long-run nominal CAGR benchmarks (Damodaran data, U.S., 1928-2024): Treasury bills 3.4%, 10-year Treasuries 4.9%, U.S. corporate bonds 5.5%, S&P 500 10.0%, small-cap stocks 11.5%, gold 4.8% (since 1971 floating), residential real estate 4.2%. After inflation (real return): T-bills 0.4%, Treasuries 2.0%, stocks 7.0%, small-cap 8.5%, gold 1.8%, real estate 1.2%.
For active investments, beating the S&P 500 CAGR (~10% nominal, ~7% real) is the benchmark. The vast majority of actively managed funds fail to beat the index over 10+ year horizons (SPIVA Scorecard data: ~85-95% of large-cap U.S. equity funds underperform the S&P 500 over 15 years). For individual investors, low-cost index funds capturing ~10% CAGR are the historical near-optimum strategy.
Outliers exist. Berkshire Hathaway's 19.8% CAGR over 60 years is the documented record for long-run public market outperformance. Renaissance Technologies' Medallion fund delivered ~66% gross / ~39% net CAGR over 30+ years — but is closed to outside investors. These outcomes are statistical outliers and not reasonable expectations for typical investing. The accessible benchmark for a long-term retail investor is the index CAGR.
Long-run CAGR — major asset classes (Damodaran NYU Stern, 1928-2024)
Reference long-run CAGR for major U.S. asset classes, both nominal and inflation-adjusted (real).
| Asset class | Nominal CAGR | Real CAGR (after inflation) | Volatility (std dev) |
|---|---|---|---|
| S&P 500 (large-cap stocks) | 10.0% | ~7.0% | 19.5% |
| U.S. small-cap stocks | 11.5% | ~8.5% | 32.0% |
| U.S. 10-year Treasuries | 4.9% | ~2.0% | 8.5% |
| U.S. corporate bonds (Baa) | 6.5% | ~3.5% | 8.0% |
| U.S. Treasury bills (3-month) | 3.4% | ~0.4% | 3.0% |
| Gold (1971-2024) | 4.8% | ~1.8% | 20.0% |
| Residential real estate (national index) | 4.2% | ~1.2% | 6.5% |
| Berkshire Hathaway (1965-2024) | 19.8% | ~16.5% | — |
Volatility (standard deviation of annual returns) affects investor experience even when CAGR is high. Small-cap stocks delivered higher CAGR than large-cap but with much higher volatility — many investors couldn't hold through drawdowns. Risk-adjusted return (Sharpe ratio) often favors large-cap S&P 500 over small-cap for most investors.
Frequently Asked Questions
What is CAGR?
Compound annual growth rate is the constant yearly rate that would grow a starting value to an ending value over a set number of years. It is a smoothed average rate.
How is CAGR different from total growth?
Total growth is the whole change from start to end. CAGR spreads that change into a per-year rate, which makes periods of different lengths comparable.
Why does CAGR ignore volatility?
CAGR uses only the start and end values. The path between them — steady, or full of swings — does not change the figure, so it says nothing about risk.
Can CAGR be negative?
Yes. If the ending value is below the starting value, CAGR is negative, showing the steady annual rate of decline over the period.
What is CAGR used for?
It is widely used to compare the historical growth of investments, revenue, or any quantity, by reducing each to a single annual rate.
When is this calculator unreliable?
When comparing arithmetic average returns to CAGR (always different unless there's zero variance — arithmetic averages overstate compound returns), when interim cash flows or contributions occurred (CAGR ignores these — use money-weighted return or IRR for these cases), or when measurement periods span very different market regimes (CAGR from 2009 bottom to 2024 peak is much higher than 1999 top to 2014 trough for the same asset).
References & Authoritative Sources
- U.S. Securities and Exchange Commission (SEC) — Investor Guidance on Performance Reporting · consulted June 1, 2026 · Federal guidance on annualized return reporting
- CFA Institute — Global Investment Performance Standards (GIPS) — GIPS Standards for Performance Measurement · consulted June 1, 2026 · Industry standard for performance reporting
- Damodaran Online (NYU Stern) — Historical Equity Risk Premium Data · consulted June 1, 2026 · Authoritative academic source for long-run CAGR comparisons
Related Calculators
Data Sources & Benchmarks
This calculator draws on 2 independent, dated sources.
Methodology & Review
CAGR (Compound Annual Growth Rate) equals (final value / initial value)^(1/years) − 1, expressed as a percentage. The calculator returns the annualized growth rate. CAGR is the geometric mean of period returns — it answers: 'what constant annual growth rate would have produced the same final value?' CAGR is the canonical multi-year performance measure for investments, businesses, and economic data. The S&P 500's long-run CAGR is ~10% nominal, ~7% real (inflation-adjusted). Berkshire Hathaway's CAGR under Warren Buffett (1965-2024): ~19.8%, more than double the index. RELIABILITY: Reliable for end-point comparison with consistent measurement. Less reliable when interim cash flows occur (dividends, distributions — CAGR assumes reinvestment at the same rate, which may not happen), when measured across periods with very different starting points (CAGR over a bear-market start is much higher than over a bull-market start for the same investment), or when comparing across asset classes with different risk profiles.
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