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.
You invested $10,000 in an S&P 500 index fund. After 6 years it's worth $18,000. What's your 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.
Enter your start value, end value, and years — get CAGR, total return, year-by-year breakdown, and benchmark comparison.
Open CAGR Calculator →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.
Suppose a fund does +50% in Year 1 and −50% in Year 2.
| 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.
| 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.
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.
| 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.
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.
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 |
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 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.
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.
Use the CAGR Calculator →CAGR is the "smoothed" annual growth rate of an investment. If your $10,000 grew to $18,000 over 6 years — through up years, down years, and sideways years — CAGR tells you the single steady rate (10.3%) that would have produced the same result. It's the most honest single number for comparing investment performance.
CAGR = (End Value ÷ Start Value)^(1 ÷ Years) − 1. The exponent (1 ÷ Years) is what converts total growth into a per-year figure, accounting for compounding. On a calculator: divide end by start, raise to the power of (1 ÷ years), then subtract 1. Multiply by 100 to get a percentage.
Beating the S&P 500's long-run ~10% CAGR is the standard benchmark for US large-cap investing. A 12–15% CAGR over 10+ years is considered excellent. Anything above 20% sustained over a decade is exceptional and rare. Be wary of anyone claiming consistent 30%+ CAGR — even Warren Buffett averages about 20% since 1965.
Yes. If the end value is lower than the start value, CAGR is negative. Example: $10,000 falling to $6,000 over 5 years gives a CAGR of approximately −9.5% per year. A negative CAGR means your investment steadily lost value at that compounded annual rate.
The S&P 500 has delivered approximately 10–10.5% nominal CAGR since 1957 (including dividend reinvestment). Adjusted for inflation (~3%), the real CAGR is around 7%. Over the last 10 years (2014–2024), the S&P 500 delivered approximately 13% CAGR — above average due to a strong bull market. Over any particular 10-year window you may see anywhere from −1% to 18% depending on start/end dates.
ROI (Return on Investment) is the total percentage gain with no time dimension: (End − Start) ÷ Start × 100. An ROI of 80% could be over 1 year (exceptional) or 10 years (poor). CAGR normalises ROI into an annual rate, making comparisons meaningful. Always convert ROI to CAGR when comparing investments of different durations.