1. What is CAGR?

The Compound Annual Growth Rate (CAGR) is the mean annual growth rate of an investment over a specified time period longer than one year. It represents one of the most accurate ways to calculate and determine returns for individual assets, investment portfolios, and anything that can rise or fall in value over time.

2. How Does the Calculator Work?

The calculator uses the CAGR equation:

Where:

• \( End \) — Ending value
• \( Start \) — Starting value
• \( Days \) — Time period in days

Explanation: The equation calculates the constant rate of return that would be required for an investment to grow from its starting balance to its ending balance over the given time period.

3. Importance of CAGR Calculation

Details: CAGR is useful for comparing growth rates from different investments or business metrics over time. It smooths the progress of growth and makes different investments comparable.

4. Using the Calculator

Tips: Enter the starting value, ending value, and time period in days. All values must be valid (start > 0, end ≥ 0, days > 0).

5. Frequently Asked Questions (FAQ)

Q1: Why use CAGR instead of average growth rate?
A: CAGR accounts for compounding effects over time, while average growth rate does not, making CAGR more accurate for long-term growth measurement.

Q2: What are typical CAGR values?
A: For investments, 7-10% is considered good for stock market returns. Higher values indicate better performance, but context is important.

Q3: Can CAGR be negative?
A: Yes, if the ending value is less than the starting value, CAGR will be negative, indicating a loss over the period.

Q4: What are limitations of CAGR?
A: CAGR doesn't account for investment risk or volatility. It assumes smooth growth which rarely happens in reality.

Q5: How is days calculation different from years?
A: This calculator uses exact days for more precision than whole years, especially important for shorter time periods.