CAGR calculator
Enter what an investment was worth at the start and at the end. This solves the single constant rate that connects them, then deflates it by the inflation that actually occurred over the same calendar years.
Worked example — Compound annual growth rate: +6.20%. $10,000 to $45,000, 2000 to 2025 (25 years): +3.58% after CPI-U inflation
What is the CAGR formula, and what does it actually claim?
Compound annual growth rate is one equation: the ending value over the beginning value, raised to the power of one over the number of years, minus one. $10,000 growing to $45,000 over 25 years grew ×4.50 in total, and that multiple raised to the power of 1/25 is 1.0620, so the rate is +6.20% a year. What that asserts is narrow: had the balance grown by exactly that rate every single year, it would have finished in the same place. It says nothing about whether it did.
Annualizing a short holding period magnifies noise into a headline. A position up 9% over four months annualizes to about 29%, which is a real arithmetic statement and a poor description of anything. The convention worth keeping is to annualize periods of a year or more and to quote the raw total return below that. For the forward version of this question, where you supply a rate rather than solve for one, use the compound interest calculator.
Why the exact real rate is not the subtraction
Almost every free CAGR calculator stops at the nominal rate, and the ones that mention inflation subtract it. Purchasing power does not subtract, it divides: one plus the real rate equals one plus the nominal rate over one plus inflation. The CPI-U annual average was 172.2 in 2000 and 321.943 in 2025, which is +2.53% a year. Against a +6.20% nominal return the exact real rate is +3.58%, not the +3.67% the subtraction gives, an overstatement of 0.09 percentage points.
| Measure | Annual rate | Over 25 years |
|---|---|---|
| Nominal growth | +6.20% | ×4.500 |
| Inflation | +2.53% | ×1.870 |
| Real growth, exact | +3.58% | ×2.407 |
| Real growth, nominal minus inflation | +3.67% | ×2.460 |
Source: BLS CPI-U series CUUR0000SA0, annual averages; retrieved 2026-08-14.
What is a good CAGR?
There is no single right answer; it depends on what was invested and how much risk it carried. As general context, not advice or a target to chase:
| CAGR band | Roughly describes |
|---|---|
| 0% to 3% | Conservative, bond-like |
| 4% to 7% | A typical diversified portfolio |
| 8% to 12% | Aggressive, equity-heavy |
| 12% and up | Warrants scrutiny of the period or the claim |
CAGR vs. average annual return
$100 up 50% one year and down 50% the next ends at $75, since $150 falling 50% lands at $75. The simple average of the two yearly returns is 0%, which reads as break-even. The CAGR is what actually happened: -13.40% a year, because $100 to $75 over two years is a multiple of 0.75, and 0.75 is 0.8660 compounded twice. The arithmetic average ignores the order and size of losses; the geometric rate a CAGR calculator solves for cannot.
A single CAGR also cannot tell two accounts apart: one that drifts up in a line, and one that loses 55% in year three and spends a decade recovering, can post the same CAGR, because the compound rate only reads the first and last value. That matters most when money moves in or out along the way: if contributions or withdrawals happened, the honest measure is a money-weighted return, and this calculator will overstate what the investor actually experienced.
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