CAGR calculator
Calculate Compound Annual Growth Rate for your investments
📊 Understanding CAGR
CAGR (Compound Annual Growth Rate) represents the mean annual growth rate of an investment over a specified time period longer than one year. It's one of the most accurate ways to calculate and compare returns.
CAGR smooths out volatility and provides a single rate that describes the rate of return over the investment period.
🔍 How CAGR Is Calculated
The CAGR formula is:
CAGR = (Final Value / Initial Value)^(1/Years) - 1
- Final Value: The ending value of the investment
- Initial Value: The beginning value of the investment
- Years: The number of years the investment was held
❓ Frequently Asked Questions
What is a good CAGR?
A good CAGR depends on the asset class and market conditions. For stocks, 7-10% is often considered good, while bonds might have lower CAGRs of 3-5%.
How is CAGR different from average return?
CAGR accounts for compounding effects and provides a more accurate picture of investment performance over time, while simple average return can be misleading due to volatility.
Can CAGR be negative?
Yes, if the final value is less than the initial value, CAGR will be negative, indicating a loss over the investment period.