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CAGR Calculator

Calculate compound annual growth rate from start and end values, project future value at a given CAGR, or find the required rate to hit a target.

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CAGR smooths out year-to-year volatility to show a steady growth rate equivalent. It does not mean growth is actually constant each year.
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Esempi pratici

Dubai property: AED 800,000 to AED 1,250,000 over 7 years

CAGR = (1,250,000 / 800,000)^(1/7) - 1 = 6.6% per year. This is above Dubai's long-run residential average of approximately 4-5% nominal and reflects the strong 2020-2024 recovery cycle.

Equity portfolio: AED 200,000 to AED 450,000 over 10 years

CAGR = (450,000 / 200,000)^(1/10) - 1 = 8.45% per year. Comparable to global equity index returns, but requires disciplined buy-and-hold with reinvested dividends to sustain.

Required CAGR: AED 100,000 target AED 300,000 in 8 years

Required CAGR = (300,000 / 100,000)^(1/8) - 1 = 14.7% per year. This exceeds typical equity market returns — requires concentrated risk, leverage, or a high-performing alternative asset class.

Domande frequenti

lettura 5 min
What does CAGR stand for?▾
CAGR stands for Compound Annual Growth Rate. It represents the constant annual rate at which an investment would have grown from its beginning value to its ending value, assuming all growth is reinvested. It smooths out year-to-year volatility into a single annualised number, making it the most useful metric for comparing investment performance across different time periods.
What is the CAGR formula?▾
CAGR = (Ending Value / Beginning Value)^(1/n) - 1, where n is the number of years. For example, if AED 100,000 grows to AED 161,000 over 5 years: CAGR = (161,000/100,000)^(1/5) - 1 = 1.61^0.2 - 1 = 0.10 = 10% per year.
Why is CAGR more useful than average annual return?▾
Simple average annual return adds up yearly percentage returns and divides by years — this ignores the compounding effect of losses. If an investment gains 50% in year 1 and loses 33% in year 2, the average return is +8.5%. But CAGR = (100 x 1.5 x 0.67)^(0.5) - 1 = approximately 0.25% — essentially flat. CAGR correctly reflects what an investor actually experienced.
What is a good CAGR for a stock portfolio?▾
The S&P 500 has delivered approximately 10% CAGR in USD terms over the long run (including dividends reinvested). A 7% real (inflation-adjusted) CAGR is often cited as a planning benchmark. A CAGR of 15%+ sustained over 10+ years is exceptional and achieved by very few investors.
Can CAGR be negative?▾
Yes. If an investment loses value over the period, CAGR will be negative. For example, AED 100,000 falling to AED 64,000 over 5 years gives CAGR = (64,000/100,000)^(1/5) - 1 = -8.6% per year. Negative CAGR over long periods is uncommon for diversified portfolios but common for individual stocks and cryptocurrencies.
What is CAGR used for in business?▾
In business, CAGR is used to measure and compare revenue growth, customer growth, or market size growth. It is preferred over raw year-on-year percentages because it normalises for different time periods and allows direct comparison between companies.
How do I calculate how long to double my money?▾
Use the Rule of 72: divide 72 by the annual growth rate to get the approximate years to double. At 8% CAGR, money doubles in 72/8 = 9 years. For precise calculations, the exact doubling time = log(2) / log(1 + r).
What is the difference between CAGR and IRR?▾
CAGR measures growth between two single point-in-time values. IRR (Internal Rate of Return) accounts for the timing and size of multiple cash flows — making it more appropriate for investments with regular contributions, withdrawals, or irregular cash flows. For a single lump sum held to maturity, CAGR equals IRR.

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CAGR is a mathematical tool for describing historical growth. Past CAGR does not predict future returns. All investment involves risk of capital loss.

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