The compound annual growth rate (CAGR) is the one honest number for comparing investments held for different lengths of time: the smooth yearly rate that turns your starting value into your ending value. This calculator works in both directions — enter start value, end value and years to find the CAGR (and your total return), or flip the toggle to project what a given rate turns your money into. It also shows the exact doubling time at that rate, so you can sanity-check the famous Rule of 72.
By Kestutis Balciunas · Last reviewed: 17 July 2026 · Figures and rules are 2026-vintage estimates — verify current data before acting. Educational tool, not advice.
How the CAGR formula works
CAGR = (end value ÷ start value)1/years − 1. Take €10,000 that grows to €20,000 over 10 years: (20,000 ÷ 10,000)1/10 − 1 = 7.18% per year. The total return was 100%, but the annualised rate is what lets you compare that decade against a fund you held for three years or a property you held for twenty. The doubling time follows directly: ln(2) ÷ ln(1.0718) = exactly 10 years, while the Rule of 72 approximates it as 72 ÷ 7.18 ≈ 10.0 — close, but the calculator always shows you the exact figure.
CAGR vs average annual return — the trap
The arithmetic average of yearly returns systematically overstates what you actually earned. The classic example: a fund gains +50% in year one and loses −50% in year two. The “average annual return” is 0% — yet €100 became €150 and then €75. The CAGR tells the truth: (75 ÷ 100)1/2 − 1 = −13.4% per year. The bigger the swings, the wider this gap (it is called volatility drag), which is one reason headline return figures routinely mislead investors. You can see how differently two funds with similar averages behave in practice with our ETF volatility and drawdown comparison.
What CAGR hides
CAGR compresses the whole journey into two points, so it hides everything in between: the sequence of good and bad years, the drawdowns you had to sit through, and the volatility that separates a smooth 7% from a stomach-churning one. That matters most once you add or withdraw money along the way — real portfolios with monthly contributions earn a money-weighted return that can differ substantially from the fund’s CAGR. For planning forward rather than measuring backward, the compound growth calculator models regular monthly investing on top of a growth rate, and the financial freedom calculator turns the same maths into a target date. All figures here are gross of taxes and fees, and past growth rates are not a forecast — treat any projected end value as an illustration, not a promise.
Using CAGR to set realistic expectations
Two practical habits make this number genuinely useful. First, measure over long windows: annualising anything under a couple of years mostly amplifies noise — a fund that gained 4% in three months has not “returned 17% a year”, and a CAGR computed across a single bull run will flatter any strategy. Second, anchor your projections to history rather than hope. Broad global equity indices have delivered somewhere around 7–9% nominal per year over multi-decade periods (verify current long-run data — the figure moves with the window you pick), which is roughly 4–6% after inflation; at 7% the doubling time is about 10.2 years, at 5% it stretches to 14.2. If a projection only works with a double-digit CAGR sustained for decades, the plan is fragile — history offers few examples of diversified portfolios compounding that fast for that long. Run your own numbers both ways: the rate your plan needs, and the end value a sober rate actually delivers.
These numbers make more sense with the guide
The free 12-page Starter Kit turns them into decisions: your first fund, a safe broker, and the tax basics for your country.
Frequently asked questions
Q: What is the difference between CAGR and total return?
A: Total return is the cumulative percentage gain over the whole period — €10,000 to €20,000 is +100%. CAGR annualises it: the same doubling is 7.18% per year over 10 years but 14.9% per year over 5. CAGR is the number to use when comparing investments held for different lengths of time.
Q: Why is my CAGR lower than my fund’s advertised average annual return?
A: Arithmetic averages ignore compounding of losses. A +50% year followed by a −50% year averages to 0% but leaves you down 25%, a CAGR of −13.4% per year. The gap between the two grows with volatility, so smooth and bumpy funds with the same average deliver very different real outcomes.
Q: Can CAGR be negative?
A: Yes — whenever the end value is below the start value. A negative CAGR is simply your loss expressed as a smooth annual rate. The calculator shows it in red, and no doubling time exists at a negative rate.
Q: How accurate is the Rule of 72?
A: Very good between roughly 4% and 12% — at 7.18% it says 10.03 years versus an exact 10.00. It drifts at the extremes: at 1% the true doubling time is 69.7 years (the rule says 72), and at 20% it is 3.8 years (the rule says 3.6). The calculator always shows the exact ln(2)/ln(1+r) figure.
Q: Does CAGR account for monthly contributions?
A: No. CAGR describes a single lump sum growing between two dates. If you invest monthly, your personal (money-weighted) return depends on when each contribution went in — use a compound growth calculator with a monthly contribution field to model that correctly.