The CAGR of your holdings is calculated after a specified length of time has passed. It will provide a comparison of your investment results one year to next. For investors, the compound annual growth rate is a valuable metric that may be used to track the growth (or fall) of an investment.
To calculate the compound annual growth rate, it is required to assume that each year’s earnings will be reinvested. As a result, the CAGR is not a perfect measure of return, but rather a more informative one. Typically, the annual growth rate of an investment is limited to a specific proportion. Despite that, the CAGR calculation is used often to compare various asset classes.
Given its prevalence, investors must seek a basic method for calculating CAGR. Those interested in estimating their return on the investment may use the calculator for compound annual growth rate.
To do the calculations required by this application, the formula for the compound annual growth rate is used (CAGR formula). For instance, if you own an appreciating mutual fund, you may use the calculation to assess your investment’s real return. The CAGR returns calculator enables investors to compare yearly growth rates with benchmark returns.
Advantages of using a CAGR Calculator:
- Because of it, investors can analyse the returns on several different investments in a variety of different scenarios. It is possible to utilize a variety of test cases to evaluate the results under various conditions.
- Taking advantage of it couldn’t be much simpler than it already is. To use the online CAGR calculator, all you need to do is enter your starting value, the total transaction, and the amount of time over which you would want to invest your money.
- Assume that the value of the stock fund units you purchased in the past has increased since you first purchased them. You will be able to determine how much money you have gained from your investments with the assistance of the online CAGR calculator.
- A comprehensive estimate of the return on investment is shown here.
- Calculating a company’s performance in comparison to that of its competitors or the industry as a whole may also be accomplished with the use of a compound annual growth rate calculator.
What is the mathematical expression for CAGR?
To calculate the compound annual growth rate of investment, perform these procedures while referring to the CAGR formula:
Take the value of the investment at the end of the time and divide it by the value of the investment at the beginning of the period.
After you have done that, multiply the result by one and then divide the answer by the number of years the investment will endure.
Subtract one from the previous number to arrive at the new total.
When it comes to investing in stocks, no set percentage represents a desirable annualized growth rate (CAGR). There are a few different factors at play here just like it happened with the future value calculator. In theory, the compound annual growth rate (CAGR) of the great majority of assets ought should be higher than the interest rate that may be earned on a savings account.