CAGR Calculator
CAGR Results
The Compound Annual Growth Rate (CAGR) is the mean annual growth rate of an investment over a specified period of time longer than one year.
Formula: CAGR = (Final Value / Initial Value)(1/Period) - 1
About Compound Annual Growth Rate (CAGR)
CAGR is a useful measure of growth over multiple time periods. It represents one of the most accurate ways to calculate and determine returns for anything that can rise or fall in value over time.
What is CAGR?
CAGR is the year-over-year growth rate of an investment over a specified period of time. It smooths the progress of an investment as if it had grown at a steady rate on an annually compounded basis.
When to Use CAGR
• Comparing historical returns of investments
• Projecting future growth based on past performance
• Evaluating business metrics like revenue growth
• Comparing performance of different investments
Limitations of CAGR
• Doesn't reflect investment risk or volatility
• Assumes smooth growth which rarely happens
• Doesn't account for additional contributions/withdrawals
• Past performance doesn't guarantee future results