CAGR Calculator 2026: What Is CAGR, Formula & How to Benchmark Any Investment
What Is CAGR?
CAGR (Compound Annual Growth Rate) is the single steady annual rate at which an investment would have grown from its starting value to its ending value — as if it grew at that exact rate every year without fluctuation.
In reality, no investment grows at a perfectly steady rate. It might gain 30% one year and lose 10% the next. CAGR smooths all of that out into one clean annual number, making it the standard metric for comparing investments across different time periods.
What CAGR is not: it's not a guarantee of future performance, and it doesn't tell you about volatility along the way. Two investments can have identical CAGRs but wildly different experiences — one a smooth ride, one a rollercoaster.
The CAGR Formula
Years = number of years held · Result is expressed as a decimal (multiply by 100 for %)
Step-by-Step Example
You invested $10,000 in an S&P 500 index fund. After 6 years it's worth $18,000. What's your CAGR?
Step 2: Exponent = 1 ÷ 6 years = 0.1667
Step 3: 1.8 ^ 0.1667 = 1.1027
Step 4: 1.1027 − 1 = 0.1027 = 10.3% CAGR
Your investment grew at a compound annual rate of 10.3% per year for 6 years. That's close to the S&P 500's long-run historical average — a strong result.
Calculate Your CAGR Instantly
Enter your start value, end value, and years — get CAGR, total return, year-by-year breakdown, and benchmark comparison.
Open CAGR Calculator →CAGR vs Average Annual Return — The Critical Difference
This is where most investors get misled. Average annual return and CAGR are not the same thing — and using the wrong one can make a terrible investment look acceptable.
The Misleading Math Problem
Suppose a fund does +50% in Year 1 and −50% in Year 2.
Actual result: $10,000 → $15,000 → $7,500
CAGR = (7,500 ÷ 10,000)^(1/2) − 1 = −13.4% per year
| Metric | Method | Result on the example above | Accurate? |
|---|---|---|---|
| Average Annual Return | Add returns, divide by years | 0% (breakeven) | ❌ No — you lost $2,500 |
| CAGR | Geometric mean | −13.4% per year | ✅ Yes — reflects real outcome |
The higher the volatility, the bigger the gap between average return and CAGR. CAGR always shows the true compounded result. Always use CAGR when comparing investments over different time periods.
Real-World CAGR Examples
Example 1: Comparing Two Funds
| Fund | Start | End | Period | Total Return | CAGR |
|---|---|---|---|---|---|
| Fund A | $10,000 | $18,000 | 5 years | +80% | 12.5% |
| Fund B | $10,000 | $22,000 | 8 years | +120% | 10.4% |
Fund B has a higher total return (120% vs 80%) but a lower CAGR (10.4% vs 12.5%) because it took 3 more years. Fund A is the better performer on a like-for-like annual basis.
Example 2: Apple Stock (2014–2024)
CAGR = (185 ÷ 19)^(1/10) − 1 = 9.74^0.1 − 1 = ~25.6% per year
Apple's 10-year CAGR of ~25.6% is more than double the S&P 500's historical average — an exceptional result that very few stocks sustain over a decade.
Example 3: S&P 500 Over Different Periods
| Period | Start Value ($10K) | End Value | CAGR | Notes |
|---|---|---|---|---|
| 2004–2024 (20 yr) | $10,000 | $73,500 | 10.5% | Includes 2008–09 crisis |
| 2014–2024 (10 yr) | $10,000 | $34,200 | 13.0% | Bull market decade |
| 2000–2010 (10 yr) | $10,000 | $9,090 | −0.9% | Lost decade (dot-com + 2008) |
| 1994–2024 (30 yr) | $10,000 | $174,000 | 10.3% | Long-run average holds |
The "lost decade" of 2000–2010 shows why a 30-year horizon matters — the same S&P 500 that lost money over 10 years delivered 10.3% CAGR over 30 years.
$10,000 Invested — CAGR Comparison by Asset Class
Here's what $10,000 invested in different assets grows to over 20 years at historical CAGRs:
| Asset Class | Historical CAGR | $10K after 10 yr | $10K after 20 yr | $10K after 30 yr |
|---|---|---|---|---|
| NASDAQ-100 | ~14% | $37,070 | $137,435 | $509,502 |
| S&P 500 | ~10% | $25,937 | $67,275 | $174,494 |
| US Real Estate (REITs) | ~6% | $17,908 | $32,071 | $57,435 |
| Gold | ~7% | $19,672 | $38,697 | $76,123 |
| US Bonds (AGG) | ~4% | $14,802 | $21,911 | $32,434 |
| High-Yield Savings | ~4.8% | $15,935 | $25,392 | $40,471 |
| Cash (0%) | 0% | $10,000 | $10,000 | $10,000 |
Inflation has averaged ~3% annually since 1990. In real (inflation-adjusted) terms, the S&P 500's 10% nominal CAGR becomes ~7% real CAGR. Cash at 0% becomes −3% in real terms. This is why holding large amounts of cash long-term destroys purchasing power.
The Rule of 72 — How Long to Double Your Money
A quick mental calculation: divide 72 by your CAGR to find how many years it takes to double your money.
| CAGR | Years to Double | $10K becomes $20K by... | Asset Example |
|---|---|---|---|
| 2% | 36 years | Year 2062 | Regular savings account |
| 4% | 18 years | Year 2044 | US Bonds / CDs |
| 7% | 10.3 years | Year 2036 | Real S&P 500 (inflation-adj.) |
| 10% | 7.2 years | Year 2033 | S&P 500 nominal |
| 14% | 5.1 years | Year 2031 | NASDAQ-100 |
| 20% | 3.6 years | Year 2030 | High-growth stocks |
What Is a Good CAGR?
The definition of "good" depends entirely on what you're measuring against. There's no universal answer — only context-specific benchmarks.
| Investment Type | Good CAGR | Great CAGR | Red Flag |
|---|---|---|---|
| Large-cap stock funds | 8–12% | 12–15%+ | <6% (underperforms S&P 500) |
| Mid/small-cap funds | 12–16% | 16–20%+ | <10% |
| Individual stocks | 15–20% | 20%+ | Claims of 50%+ sustained CAGR |
| Real estate | 5–8% | 8–12% | <4% (barely beats inflation) |
| Business revenue | 15–25% | 25%+ | <5% (flat business) |
| Fixed income / bonds | 3–5% | 5–7% | <2% (losing to inflation) |
Berkshire Hathaway has delivered approximately 20% CAGR since 1965 — widely considered one of the greatest long-term track records in history. If a fund or advisor claims consistent 25–30%+ CAGR over 10+ years, be extremely sceptical. Even the greatest investor of all time averages 20%.
CAGR vs IRR — When to Use Which
CAGR and IRR (Internal Rate of Return) both measure annual investment returns, but they solve different problems.
| Metric | Best Used For | Handles Multiple Cash Flows? | Complexity |
|---|---|---|---|
| CAGR | Single lump sum, start → end value | No | Simple formula |
| IRR | Multiple cash flows at different dates | Yes | Requires solver/spreadsheet |
| XIRR | Irregular cash flows (SIPs, dividends) | Yes — with dates | Excel/Sheets function |
Use CAGR when you made one investment and want to know its annual return. Use XIRR when you made multiple investments at different times (like monthly contributions to a 401k or stock purchases at different dates). XIRR is the right metric for any dollar-cost averaging strategy.
Common CAGR Mistakes to Avoid
- Confusing CAGR with average return — always use CAGR, not arithmetic average, when comparing multi-year investments.
- Short time periods — a 2-year CAGR of 40% is meaningless. CAGR becomes meaningful at 5+ years and reliable at 10+ years.
- Ignoring volatility — two investments with the same CAGR can have very different risk profiles. CAGR tells you nothing about drawdowns.
- Not adjusting for inflation — a 10% CAGR in a 4% inflation environment is only 6% in real terms. Always note whether a CAGR is nominal or real.
- Cherry-picking start/end dates — CAGR is sensitive to the dates chosen. Starting just before a crash or ending just after a peak produces misleading figures.
- Using CAGR for SIPs/DCA — if you made multiple contributions over time, use XIRR, not CAGR. CAGR only applies to a single lump-sum investment.
Calculate CAGR for Your Investment
Enter any start value, end value, and years. Get CAGR, total return, doubling time, year-by-year table, and live benchmark comparison vs S&P 500, gold, and bonds.
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