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CAGR (Compound Annual Growth Rate) Calculator

Calculate the compound annual growth rate to measure investment performance.

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CAGR Calculator: The Eye That Measures True Investment Performance

In a volatile investment world, laughing or crying over a single period's return is like seeing only the trees and missing the forest. The Compound Annual Growth Rate (CAGR) is a powerful compass that shows the forest—the 'average' growth your investment has shown over time. It clears the fog of fluctuating yearly returns and clearly reveals long-term performance as if it grew at a steady compound rate each year.

SeriesCalc's CAGR calculator objectively evaluates the performance of various assets—stocks, funds, real estate, crypto—and lets you compare investment alternatives on the same basis. It can also serve as a key metric for analyzing business performance such as revenue growth and user growth trends. Leave the complex math to us and focus on the insights the data reveals.

Term Glossary

CAGR (Compound Annual Growth Rate)
The average annual growth rate assuming the asset grew at a steady compound rate each year over the period.
Rule of 72
A formula to estimate the years for principal to double: divide 72 by the annual growth rate (%).
MDD (Maximum Drawdown)
The peak-to-trough decline during the investment period, an indicator of volatility (risk).

📈 The CAGR Formula: Compounding Magic in Numbers

The core of CAGR is tracing the concept of 'compounding' backwards. It calculates the average annual growth rate, assuming the ending value grew from the starting value at a compound rate each year.

CAGR=(EVBV)1n−1\text{CAGR} = \left( \frac{\text{EV}}{\text{BV}} \right)^{\frac{1}{n}} - 1

- Ending Value / Starting Value: Shows how many times the asset grew over the whole period.

- ^(1 / Period): The 'root' calculation. It divides the total growth multiple by the investment period (years) to find the average annual growth—e.g., the 5th root for 5 years, the 10th root for 10 years.

- (- 1) * 100: Converts the computed annual growth rate into a percentage (%).

Example)

If an investment starting at 10M KRW in early 2020 became 25M KRW in early 2025, the period is 5 years.

  • Total growth multiple: 25M / 10M = 2.5x
  • Annual growth conversion: 2.5 ^ (1/5) ≈ 1.2011
  • Percentage conversion: (1.2011 - 1) * 100 ≈ 20.11%

→ That is, this investment grew at an average compound rate of 20.11% per year over 5 years.

💡 Use CAGR Like a Pro: 5 Practical Strategies

  • 1. Fairly Compare Investments With Different Periods

    "Stock A: 50% over 3 years, Fund B: 80% over 5 years." At first glance B looks better. Really? Computing the annual return with CAGR reveals the truth.
    - Stock A CAGR: ((1.5)^(1/3) - 1) * 100 ≈ 14.47%
    - Fund B CAGR: ((1.8)^(1/5) - 1) * 100 ≈ 12.47%
    In fact Stock A had the higher annual growth. CAGR removes the trap of differing periods and enables objective comparison.

  • 2. Recognize the Hidden Risk of 'Path Volatility'

    Because CAGR looks only at the start and end, it hides the roller-coaster volatility in between. Two products with 10% CAGR—one grew steadily, the other swung between +100% and -50%. High volatility shakes investor psychology and triggers bad trades. Build the habit of evaluating investment 'quality' with volatility metrics like standard deviation or MDD (maximum drawdown) alongside CAGR.

  • 3. Past Data Is Only a Reference, Not a Guarantee of the Future

    A high past CAGR is not a crystal ball promising future high returns. Explosively growing industries like tech stocks can show very high historical CAGR. Analyze the cause of past performance and always consider qualitative factors like industry paradigm shifts, competitive landscape, regulatory risk, and company fundamentals to judge future growth sustainability.

  • 4. Intuitively Grasp Compounding With the 'Rule of 72'

    Useful alongside CAGR is the 'Rule of 72': '72 / CAGR(%) ≈ years to double the principal'. For example, at 12% CAGR you can quickly estimate ~6 years (72/12) to double. It is a handy mental tool for setting long-term goals and feeling the power of compounding.

  • 5. Know CAGR’s Limits and Use Complementary Metrics

    CAGR does not reflect adding or withdrawing funds midway. For monthly installment investing, CAGR can differ greatly from the actual final return. In such cases, referencing the money-weighted rate of return (MWRR), which considers cash flows, or the time-weighted rate of return (TWRR), which removes external factors (deposits/withdrawals) to measure pure performance, can be more accurate. Recognize CAGR's limits and choose the right metric for the situation.

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