CAGR frequently asked questions

CAGR, or compound annual growth rate, is the steady yearly rate at which a value would have grown from its starting point to its ending point if the growth had been reinvested every year. It smooths out ups and downs into one number, which makes it the standard way to compare investments, company revenue or any metric measured over different lengths of time.

Divide the ending value by the starting value, raise the result to the power of one divided by the number of years, then subtract 1: CAGR = (End ÷ Start)^(1 ÷ Years) − 1. For example, $10,000 growing to $25,000 in 5 years gives 2.5^0.2 − 1 = 0.2011, a CAGR of 20.11%.

On a scientific or phone calculator (turn a phone sideways for the scientific keys):

1. Divide the ending value by the starting value, e.g. 25,000 ÷ 10,000 = 2.5.
2. Press the power key (xʸ or ^) and enter (1 ÷ years), e.g. 2.5 ^ (1 ÷ 5) = 1.2011.
3. Subtract 1 and multiply by 100: 0.2011 × 100 = 20.11%.

If your calculator has a ʸ√x key, you can take the fifth root of 2.5 directly instead of using a fractional power.

A basic calculator without a power key can still do it with the square-root trick:

1. Divide the ending value by the starting value (25,000 ÷ 10,000 = 2.5).
2. Press √ 12 times.
3. Subtract 1, divide by the number of years (5), then add 1.
4. Square the result 12 times — on most basic calculators press × then =, twelve times.
5. Subtract 1 and multiply by 100. You get about 20.11%.

The result is accurate to about two decimal places. For an exact answer, use the free CAGR calculator at the top of this page.

A CAGR calculator shows how fast something really grew per year, so you can:

• compare investments held for different lengths of time on the same yearly scale;
• judge a company’s revenue, profit or user growth over several years;
• check whether your returns beat inflation (real CAGR) or a benchmark index;
• estimate how long money takes to double at a given rate;
• project future values with reverse CAGR when planning goals.

Pick the metric — usually revenue, net profit, earnings per share or customers — and take its value from the first and last annual reports in your period. Then apply (Latest ÷ Earliest)^(1 ÷ Years) − 1. Count the years between the reports, not the number of reports: revenue of ₹20 crore in FY2021 and ₹52 crore in FY2025 spans 4 years, so the revenue CAGR is (52 ÷ 20)^(1/4) − 1 = 26.98%.

CAGR already is an annual growth rate — the constant one that links the start and end values. To turn it into year-by-year figures, multiply the starting value by (1 + CAGR) once for each year: at 20% CAGR, $10,000 becomes $12,000, then $14,400, then $17,280 and so on. The calculator above shows this in its year-by-year growth table.

To restate a CAGR for a different period, use compounding rather than multiplication: total growth over n years is (1 + CAGR)^n − 1, and the monthly rate is (1 + CAGR)^(1/12) − 1. Keep in mind that the actual growth in any single year can be very different from the CAGR, because CAGR smooths out volatility.

Total returns can’t be compared when the periods differ. A 60% gain over 3 years beats an 80% gain over 6 years — CAGR shows it: 16.96% a year versus 10.29%. Because it reflects compounding, unlike a simple average, CAGR is used in fund fact sheets, company reports and valuation models.

It depends on the asset and the risk taken. As a rough guide, the US stock market (S&P 500) has returned around 10% a year nominal over the long run, high-quality bonds around 4–5%, and savings accounts less. A CAGR above inflation means your money grew in real terms; a CAGR above a low-cost index fund means the extra risk or effort paid off. See what is a good CAGR for benchmarks by asset class.

For a large, established company, revenue CAGR of 8–12% sustained over five years or more is generally considered healthy. Mid-sized firms growing 15–20% and young companies above 25% are usually seen as high-growth. Consistency matters as much as the number: steady growth with rising profit is more convincing than one spike, so compare revenue CAGR with profit CAGR and with industry peers.

Yes. Enter the period as years plus months (for example 2 years 7 months) or pick exact dates, and the calculator annualises the result correctly. It also shows the monthly CAGR, (1 + CAGR)^(1/12) − 1. If your data is monthly, a monthly growth rate is simply (End ÷ Start)^(1 ÷ Months) − 1.

The average annual return is an arithmetic mean of each year’s return, so it overstates growth when returns swing. CAGR is the geometric mean. If an investment gains 50% and then loses 50%, the average return is 0% but the CAGR is −13.4%, because you really ended with less money. More in CAGR vs average annual return.

Yes. When the ending value is lower than the starting value, CAGR is negative and shows how fast the value shrank each year. If the ending value is zero, CAGR is −100%. CAGR cannot be calculated from a starting value of zero or below.

Use =(End/Start)^(1/Years)-1 or the built-in =RRI(Years, Start, End), then format the cell as a percentage. For exact dates use =(End/Start)^(365.25/(EndDate-StartDate))-1. See the CAGR in Excel guide for a free template.

Only when there is a single investment at the start and a single value at the end. If you add or withdraw money along the way — for example a monthly SIP or regular deposits — use XIRR or IRR, because CAGR ignores the timing of those cash flows. See CAGR vs IRR vs XIRR for a worked SIP example.

Over long periods, most of a portfolio’s growth rate comes from its asset allocation — the split between stocks, bonds and cash — plus low costs and staying invested. Holding more stocks has historically raised CAGR at the price of bigger swings. Choose a mix that suits your age, goal and risk tolerance, and rebalance periodically to keep it there.

No. Every calculation runs in your browser. Nothing is sent to a server and there is no sign-up. The “Copy link” button simply puts your inputs in the page address so you can bookmark or share a result.

Divide the value of your position at the end by what you paid, raise the result to the power of 1 ÷ years held, and subtract 1. Shares bought for $4,000 and worth $9,500 six years later: (9,500 ÷ 4,000)^(1/6) − 1 = 15.51% a year.

Include them if you want the total return. Enter cash dividends you received in the optional dividends field, or use a value that already includes reinvested dividends. Leaving them out gives the price-only CAGR, which understates the return of dividend-paying stocks.

No. CAGR is one smoothed rate between two dates. A stock that returned +40%, −20% and +25% over three years has a CAGR of 11.87%, even though no single year returned 11.87%. Use the Yearly data tab to see actual yearly returns.

Not for the whole position. CAGR assumes one purchase at the start. Calculate each purchase separately, or use XIRR, which accounts for the date and size of every buy and sale.

No. Bitcoin CAGR uses exactly the same formula as stocks or any other asset: (Ending value ÷ Starting value)^(1 ÷ Years) − 1. Only the inputs differ.

Enter the BTC price (or your holding’s value) when you bought and when you sold or today, then pick the exact dates. The calculator converts the days between them into years and applies the standard CAGR formula.

No. CAGR is a smoothed average between two endpoints. Bitcoin’s actual yearly returns have ranged from large gains to losses of more than half, so no individual year is likely to match the CAGR.

Because Bitcoin is volatile, moving the start or end date by a few months can change the endpoint prices a lot, and CAGR depends only on those two prices. Comparing several periods — or whole market cycles — gives a fairer picture.

Yes. The maths is the same for any asset: enter the starting value, the ending value and the dates.

It runs the CAGR formula backwards. Instead of finding the growth rate from two values, it takes a starting value and a growth rate and tells you the ending value: Future value = Start × (1 + CAGR)^Years.

Divide the target by the growth factor: Start = Target ÷ (1 + CAGR)^Years. To reach $100,000 in 10 years at 8% a year you need $46,319 today.

Use =Start*(1+Rate)^Years, or =FV(Rate, Years, 0, -Start). For the starting value, use =PV(Rate, Years, 0, -Target).

Use a nominal rate to project the number you will see on a statement, and a real (after-inflation) rate to project what that money will buy. Subtracting your expected inflation rate from the growth rate is a close approximation.

With the starting value in B1, ending value in B2 and years in B3: =(B2/B1)^(1/B3)-1. Format the cell as a percentage.

Use =(End/Start)^(365.25/(EndDate-StartDate))-1, or =(End/Start)^(1/YEARFRAC(StartDate,EndDate,1))-1 for an actual/actual day count.

The starting value is zero or negative, or the ending value is negative. CAGR is only defined for a positive starting value and a non-negative ending value.