Calculation details
Planning estimate only, not financial, tax, or legal advice. Verify assumptions and current rules before making decisions.
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Use this result
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What does this calculator estimate?
An investment growing from $10,000 to $20,000 over 5 years has a compound annual growth rate of (20,000 / 10,000)^(1/5) - 1 = 14.87 percent. CAGR is the single annual rate that reproduces the same ending value.
- CAGR = (ending value / starting value)^(1 / years) - 1.
- CAGR smooths volatility into one comparable annual rate (Investor.gov).
- CAGR understates risk because it ignores the path of returns.
What CAGR tells you
CAGR converts a multi-year performance into a single annual rate — the number you'd quote to compare investments. It smooths out the ups and downs: an investment that doubled in 5 years grew at 14.87% per year, even if individual years varied wildly.
Limitations to watch for
CAGR assumes smooth growth — it hides volatility and doesn't describe the path. It ignores cash flows (contributions/withdrawals) — use it for lump-sum growth, not DCA. Past CAGR doesn't predict the future.
How to use it in practice
Use CAGR to compare investments of different sizes and time frames, and to check a portfolio against benchmarks. For contributions over time, use the DCA calculator instead.
['Enter the beginning value.', 'Enter the ending value and the number of years.', 'Read the annualized growth rate.']
How this calculator works
Formula
CAGR = (ending value ÷ beginning value)^(1 ÷ years) − 1. It's the constant annual growth rate that would turn the beginning value into the ending value.
Worked example
$10,000 growing to $20,000 in 5 years: CAGR = (2)^(1/5) − 1 ≈ 14.87% per year.
Assumptions to verify
- The investment is a single lump sum.
- No contributions or withdrawals during the period.
- Returns are compounded annually at a constant rate.
Frequently asked questions
What is CAGR?
Compound annual growth rate — the single annual rate that turns the start value into the end value: (EV/BV)^(1/years) − 1.
How is it calculated?
$10,000 → $20,000 in 5 years: (2)^(0.2) − 1 = 14.87%.
Why use CAGR instead of total return?
CAGR annualizes, letting you compare investments of different durations fairly.
Does CAGR show volatility?
No — it's a smooth average. Two investments with the same CAGR can have very different risk.
Can I use it with regular contributions?
No — it assumes a single lump sum. Use the DCA calculator for contributions over time.
What's a good CAGR?
Broad stock indexes have historically returned 7–10% annually over long periods — before inflation.
Is past CAGR a prediction?
No — it describes what happened. Future returns depend on what markets do next.
Cite this tool
BoringToolsKit. “CAGR Calculator.” boringtoolskit.com/cagr-calculator/ (reviewed 2026-08-25). Free to reference in articles, syllabi, and answer posts with a link.
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