CAGR & ROI Calculator
Calculate compound annual growth rate and total return on investment.
Calculate CAGR
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CAGR
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Total Return
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Absolute Gain
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Doubling Time
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CAGR - Compound Annual Growth Rate
CAGR measures the annual growth rate of an investment over a period, assuming compound growth.
CAGR Formula
CAGR = (End / Begin)^(1/n) - 1
Why CAGR Matters
- Smooths out volatility in yearly returns
- Provides a single comparable growth figure
- Accounts for compounding effects
- Standard metric for investment comparison
CAGR vs Average Return
| Metric | CAGR | Simple Average |
|---|---|---|
| Accounts for compounding | Yes | No |
| Volatility impact | Included | Ignored |
| Best for | Investments | Simple comparisons |
Historical CAGR Examples
- S&P 500 (30-year): ~10%
- Real Estate (REITs): ~8-10%
- Bonds: ~3-5%
- Inflation: ~2-3%
Frequently Asked Questions
What is a good CAGR?
For stock investments, 7-10% CAGR is considered good. For safer investments like bonds, 3-5% is typical. Compare to market benchmarks.
Why is CAGR lower than average return?
Volatility reduces compounded returns. A 50% loss requires a 100% gain to recover. CAGR captures this effect that simple averaging misses.