CAGR Calculator Compound Annual Growth Rate
Key concepts
- ▸CAGR shows the smoothed annual return of an investment over multiple years — ignoring volatility along the way.
- ▸Formula: CAGR = (End Value / Start Value)^(1/Years) - 1
- ▸Use CAGR to compare investments with different durations on a fair, annualized basis.
- ▸A 10% CAGR doubles money in ~7.2 years (Rule of 72).
The Compound Annual Growth Rate (CAGR) is the most widely used metric to describe the growth rate of an investment over time. Unlike a simple average return, CAGR accounts for compounding — meaning each year's gains build on the previous year's balance.
Enter your starting value, ending value and the number of years below to instantly calculate the CAGR of any investment — a single stock, an ETF, a real estate property, or your entire portfolio.
What Does CAGR Actually Measure?
CAGR represents the rate at which an investment would have grown if it grew at a perfectly steady rate every year. In reality, investments fluctuate year to year. CAGR smooths those fluctuations into a single comparable annual number. If your portfolio went from 10,000 to 18,000 in 6 years, the CAGR is approximately 10.3% — meaning it grew as if it compounded at 10.3% every single year.
How to Use This Calculator
Enter your starting investment value, the ending value (or current value), and the number of years. The calculator will instantly show your CAGR. You can also work backwards: enter a target end value and a desired CAGR to find out how many years you need, or what starting capital is required.
CAGR Calculator
Compound Annual Growth Rate
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Try DonkyCapital FreeCAGR vs. Annualized Return vs. TWR — What's the Difference?
CAGR works perfectly when there are no deposits or withdrawals — just a starting amount and an ending amount. If you added or withdrew money during the period, CAGR will give a distorted result. In that case, the Time-Weighted Return (TWR) is the correct metric — it eliminates the distortion caused by cash flows. DonkyCapital calculates TWR automatically for your portfolio.
Practical Examples and Benchmarks
Historical benchmarks for context: MSCI World CAGR over 30 years is approximately 9-10%. S&P 500 long-term CAGR is approximately 10-11%. At 7% CAGR (a common ETF target), 10,000 becomes ~76,000 in 30 years. These numbers illustrate why starting early and staying invested matters far more than trying to time the market.
Frequently Asked Questions
What is a good CAGR for an investment portfolio?
For a globally diversified ETF portfolio, a long-term CAGR of 7-10% is a reasonable expectation based on historical data. Above 15% is exceptional and often unsustainable. Below 3% (after inflation) means the investment is losing purchasing power.
Can CAGR be negative?
Yes. If your ending value is lower than your starting value, the CAGR is negative. A 50% loss followed by a 50% gain does not return you to zero — you are still down 25%. This is why CAGR correctly penalizes losses more than simple averages.
What is the Rule of 72?
The Rule of 72 is a quick mental math shortcut: divide 72 by the CAGR percentage to estimate how many years it takes to double your money. At 8% CAGR, 72 / 8 = 9 years to double. At 6%, it takes 12 years.
How is CAGR different from total return?
Total return tells you the overall percentage gain (e.g., +80%). CAGR tells you the annualized rate that produced that gain. An 80% total return over 6 years equals approximately 10.4% CAGR.
Why does my CAGR differ from the fund's reported return?
Fund returns are typically calculated without deposits or withdrawals. If you made regular contributions (DCA), your personal CAGR will differ. The correct metric for portfolios with cash flows is the Internal Rate of Return (IRR) or Time-Weighted Return (TWR).
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