Calculate the Compound Annual Growth Rate (CAGR) of any investment. Enter your initial value, final value, and time period to see your annualized return — with a live animated breakdown.
Compound Annual Growth Rate — annualized investment return
CAGR — Compound Annual Growth Rate — is the single most useful metric for comparing investment returns across different time periods. Unlike a simple percentage gain, CAGR normalizes your return into an equivalent annualized rate, so you can directly compare a 5-year stock return against a 10-year real estate investment. The formula is: CAGR = (Final Value / Initial Value)^(1/Years) − 1. For example, $10,000 growing to $50,000 over 5 years gives a CAGR of 37.97% — meaning the investment effectively compounded at 37.97% each year. This is the figure mutual funds, ETFs, and investment platforms are required by the SEC to report.
CAGR is also essential for evaluating business revenue growth, evaluating portfolio benchmarks, and back-testing investment strategies. The S&P 500's 10-year CAGR through early 2026 is approximately 12.8% (or ~9.8% inflation-adjusted). When comparing funds, always check the 3-, 5-, and 10-year CAGR together — a fund with a great 1-year return but mediocre 5-year CAGR may have gotten lucky. Rule of 72: divide 72 by your CAGR to find how many years it takes to double your money. At 10% CAGR, money doubles roughly every 7.2 years.
CAGR = (Final ÷ Initial)^(1÷Years) − 1. Multiply by 100 for the percentage. Works for any asset class: stocks, real estate, savings, business revenue, or crypto.
Divide 72 by your CAGR % to estimate years to double. At 8% CAGR → 9 years. At 12% → 6 years. At 6% → 12 years. A quick mental shortcut that's accurate within ±1 year for rates between 4%–20%.
ROI (total return) doesn't account for time. A 100% ROI over 2 years vs 10 years are wildly different performances. CAGR annualizes both so you can compare apples to apples across holding periods.
S&P 500 10-yr CAGR: ~12.8% (2026). Real estate (national avg): 4%–7%. High-yield savings: 4.5%–5%. A good investment CAGR beats your risk-free alternative (T-bills currently ~4.3%).
Compound annual growth rate answers a narrow question precisely: what single constant annual rate would take a starting value to an ending value over a given period? It deliberately discards the path taken. An investment that doubled then halved and one that crept up steadily can share a CAGR, which makes it excellent for comparing end-to-end performance and useless as a measure of risk. It is a geometric mean, not an arithmetic one — averaging yearly percentage returns instead will overstate growth whenever those returns vary.
CAGR = ( Ending value ÷ Beginning value )^(1 ÷ years) − 1where:
Assumptions: Assumes no deposits or withdrawals during the period. If money moved in or out, CAGR is the wrong tool and money-weighted return (IRR) is the right one. Requires a positive beginning value; it is undefined across a sign change.
A holding bought for $25,000 is worth $61,000 eight years later, with nothing added or removed in between.
ResultCAGR = 11.80% per year
Note how this differs from a naive average. Total growth was 144% over 8 years; dividing that by 8 gives 18% a year, which is badly wrong — it ignores that later gains compound on earlier ones. The geometric mean of 11.80% is the honest figure.