CAGR Calculator — Investment Return 2026
Calculate the compound annual growth rate (CAGR) of any investment, project future portfolio value, and compare your returns against S&P 500, bonds, and inflation benchmarks. Includes a year-by-year growth table.
Investment Return Summary
Benchmark Comparison (same period)
| Benchmark | CAGR | Final Value | vs Your Return |
|---|
Year-by-Year Growth
| Year | Portfolio Value | Annual Gain | Total Return |
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CAGR (Compound Annual Growth Rate) is the smoothed annual rate at which an investment grows from its start value to its end value, assuming all returns are reinvested. It is the standard measure for comparing investment performance across different time periods and asset classes.
How It Works
- Choose to calculate CAGR from known values, or project a future value from a known rate
- Enter your initial investment, final value (or CAGR), and holding period in years
- Review CAGR, total return %, total gain, and benchmark comparisons against S&P 500 and bonds
- Check the year-by-year table to see compounding growth at each milestone
Understanding CAGR and Investment Returns
Compound Annual Growth Rate (CAGR) is the single most useful number for comparing how investments have performed over time. Unlike simple average returns, CAGR accounts for compounding — the fact that gains in one year generate additional gains in subsequent years. It answers the question: "If my investment grew at a perfectly steady rate, what would that rate be?" This makes it ideal for comparing your portfolio to index funds, real estate, or any other benchmark over the same period. With tariff-driven market volatility in 2026 pushing investors to review their portfolios, understanding your actual CAGR vs benchmarks has never been more relevant.
The CAGR Formula
CAGR is calculated as: CAGR = (Ending Value ÷ Beginning Value)^(1 ÷ Years) − 1. The exponent (1 ÷ Years) is what converts cumulative growth into an annualized rate. For instance, $10,000 growing to $20,000 over 7 years gives CAGR = (2)^(1/7) − 1 = 10.41% per year. Multiply any starting value by (1 + CAGR)^years to project future value. This is mathematically identical to the compound interest formula — see our compound interest calculator for ongoing contribution projections.
Historical CAGR Benchmarks
| Asset Class | Historical CAGR | Period | Notes |
|---|---|---|---|
| S&P 500 (nominal) | ~10% | 1957–2025 | Including dividends reinvested |
| S&P 500 (real) | ~7% | 1957–2025 | Inflation-adjusted |
| US Bonds (10-yr Treasury) | ~4–5% | Long-term avg | Higher than recent decade |
| US Real Estate | ~4–5% | 1963–2025 | Price appreciation only, ex-rent |
| Gold | ~8% | 1971–2025 | Since USD/gold peg ended |
| US Inflation (CPI) | ~3% | Long-term avg | Benchmark to preserve purchasing power |
| High-Yield Savings | 1–5% | Varies | Rate-dependent; currently ~4.5% (2026) |
CAGR vs Average Annual Return: A Common Mistake
Many investors confuse arithmetic average return (AAR) with CAGR and overestimate their performance as a result. If an investment gains 50% in year 1 then loses 33% in year 2, the AAR is +8.5%, but your actual balance is exactly where you started — a CAGR of 0%. The gap between AAR and CAGR widens with volatility. This is why financial professionals always use CAGR (or IRR for cash-flow investments) when reporting long-term performance. Mutual funds are legally required to report returns using time-weighted rates equivalent to CAGR.
Limitations of CAGR
CAGR has two key limitations. First, it only uses start and end values — it ignores the path. Two portfolios with identical CAGR could have wildly different volatility profiles; one could have been nearly flat while the other crashed 50% mid-way and recovered. Second, CAGR does not account for cash flows (deposits or withdrawals during the period). For investments with ongoing contributions, use our retirement calculator or compound interest tool instead. For investments with irregular cash flows, the proper metric is IRR (Internal Rate of Return).
Sources: S&P 500 historical returns: NYU Stern Damodaran data (1928–2025). CPI benchmark: US Bureau of Labor Statistics. Bond returns: Federal Reserve H.15 Selected Interest Rates. Real estate: S&P CoreLogic Case-Shiller Home Price Index.
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