Finance

Personal Compound Annual Growth Rate Calculator (5 Years)

Calculate compound annual growth over a period. This personal version uses a 5-year planning term as its starting point.

What this means: the CAGR is the single steady yearly rate that would turn the starting value into the ending value over 5 years, so it summarises the whole period as one average yearly pace rather than showing each separate year.

Formula

CAGR equals ending value divided by starting value, to the power of one over years, minus one.

How it works

CAGR smooths growth into a single yearly rate, even if actual yearly growth varied.

Worked example

Starting value $10,000, ending value $20,000, term 5 years. First, the growth ratio is $20,000 divided by $10,000, which is 2.00. Using the CAGR formula, the rate is 2.00 to the power of one over 5, minus one, which is 14.87% a year. Check it back: $10,000 times 1.1487 to the power of 5 is about $20,000. Total growth is $10,000, or 100% over 5 years, but that is not 20% a year, because compounding means each year's growth also grows in later years.

Who this term suits for a person: A 5-year term suits a person with a short, fixed goal who can judge a demanding rate honestly, for example topping up a house deposit, saving for a wedding, or testing whether a side income really grew. A 14.87% yearly rate is high, so it should prompt a check: did extra contributions, a one-off gain, or a risky investment do the work, rather than steady growth alone?

FAQs

What does CAGR mean?
CAGR is the steady yearly growth rate that would take a starting value to an ending value.

Is this personal calculator exact?
No, it is an estimate for planning only, based on the numbers you enter.

Are these figures financial advice?
No, they are estimates for planning only, not financial advice. Check with a qualified adviser for decisions involving large sums.

Is a 14.87% CAGR realistic over 5 years?
It can happen, but it is demanding, not normal for a bank account. Over only 5 years, one strong year or a single gain can lift the whole average, so check the yearly figures behind the 14.87% before assuming the next 5 years will repeat it.

Why is the CAGR 14.87% and not 20% a year?
Because 20% would be simple growth, $2,000 a year on $10,000. Compound growth is different: 14.87% on a growing balance reaches $20,000 in 5 years, since each year's gain also earns growth in later years. That is why the CAGR is lower than 100% divided by 5.

Can I compare a 5-year investment with a savings account using CAGR?
Yes, as a first comparison, but only on the same 5 years and the same starting and ending values. A savings account rate is usually quoted before tax and may change, while this calculator does not include fees, taxes, or changing rates, so the comparison is an estimate, not a promise.

Estimates only, not financial advice. Figures are approximate and do not include all fees, taxes, or changing rates unless stated.