Enter your Beginning Value, Final Value, and Number of Periods to calculate your Compound Annual Growth Rate (CAGR). The CAGR Calculator applies the standard formula — (FV/BV)^(1/t) − 1 — and returns your annualized growth rate as a percentage, plus the absolute gain over the full period. Great for evaluating investments, business metrics, or any time-series data.
CAGR
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Absolute Gain
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CAGR stands for Compound Annual Growth Rate. It represents the mean annual growth rate of an investment over a specified time period, assuming profits are reinvested at the end of each year. It smooths out year-to-year volatility and gives a single, standardized rate that reflects steady compounded growth.
The CAGR formula is: CAGR = (FV / BV)^(1/t) − 1, where FV is the Final Value, BV is the Beginning Value, and t is the number of years. Multiply the result by 100 to express it as a percentage. For non-annual periods, the calculator first converts t into equivalent years before applying the formula.
The simple growth rate (SGR) measures total percentage change from start to end: (FV − BV) / BV × 100. CAGR, by contrast, calculates the equivalent steady annual rate that produces the same end result via compounding. SGR ignores the time dimension, while CAGR accounts for it — making CAGR far more useful for comparing investments of different durations.
Select 'Months' as your period unit in the calculator. The tool automatically converts the number of months into equivalent years (dividing by 12) before applying the CAGR formula. This ensures the result is always expressed as an annualized growth rate regardless of the period unit you choose.
Whether 5% CAGR is good depends on context. For a low-risk savings account or government bond, 5% can be excellent. For an equity portfolio, it might lag market benchmarks. Comparing CAGR against inflation, index returns, or industry averages gives a clearer picture of performance quality.
To double your money in 3 years, you need a CAGR of approximately 26%. You can verify this with the calculator by entering a Beginning Value of 1, a Final Value of 2, and 3 years. The rule of 72 gives a quick approximation: 72 / 3 = 24%, though the exact answer is slightly higher.
CAGR assumes a single lump-sum investment with no intermediate cash flows. XIRR (Extended Internal Rate of Return) handles multiple irregular cash flows at different dates, making it more suitable for SIPs or portfolios with periodic investments or withdrawals. For a simple start-to-end analysis, CAGR is the standard tool.
CAGR does not reflect volatility — two investments with identical CAGRs can have very different risk profiles and year-to-year returns. It also assumes all gains are reinvested, ignores dividends or withdrawals, and can be misleading if the start or end values are outliers. Always use CAGR alongside other metrics like standard deviation or Sharpe ratio for a complete picture.