Investment Growth Rate Calculator

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Calculate the Compound Annual Growth Rate (CAGR) of your portfolio or assets over time.

Initial Investment ($)

Final Investment Value ($)

Investment Period (Years)

Compound Annual Growth Rate (CAGR)

Total Percentage Gain: 0%

Understanding Investment Growth Rates

The Investment Growth Rate, often referred to as the Compound Annual Growth Rate (CAGR), is one of the most accurate ways to determine the returns for individual assets, investment portfolios, and anything that can rise or fall in value over time.

Unlike simple average returns, which can be misleading due to the effects of compounding and volatility, CAGR provides a "smoothed" annual rate. It tells you what your investment would have returned annually if it had grown at a steady rate each year with profits reinvested.

The Growth Rate Formula

To calculate the annual growth rate manually, we use the following mathematical formula:

            CAGR = [(Final Value / Initial Value)(1 / Number of Years) – 1] x 100
        

Why CAGR Matters for Investors

Benchmarking: Compare your portfolio performance against indices like the S&P 500.
Volatility Smoothing: It ignores year-to-year fluctuations to provide a long-term perspective.
Future Planning: Helps estimate how much your capital might grow based on historical performance.

Practical Example:
If you invested $10,000 in a tech stock and after 5 years your account is worth $18,000, your Total Growth is 80%. However, your CAGR (Compound Annual Growth Rate) is 12.47%. This means your money grew by an average of 12.47% every single year.

Key Limitations

It is important to remember that CAGR does not account for Investment Risk. Two investments might have the same 10% CAGR, but one might have been extremely volatile while the other was steady. Additionally, this calculator assumes no intermediate deposits or withdrawals were made during the period.

function calculateGrowth() { var initial = parseFloat(document.getElementById('initialValue').value); var final = parseFloat(document.getElementById('finalValue').value); var years = parseFloat(document.getElementById('years').value); var resultDiv = document.getElementById('resultDisplay'); var cagrOutput = document.getElementById('cagrOutput'); var totalOutput = document.getElementById('totalGrowthOutput'); if (isNaN(initial) || isNaN(final) || isNaN(years) || initial <= 0 || years <= 0) { alert("Please enter valid positive numbers. Initial investment and years must be greater than zero."); return; } // CAGR Formula: ((EV/BV)^(1/n)) – 1 var cagr = (Math.pow((final / initial), (1 / years)) – 1) * 100; // Total Growth Formula: ((EV – BV) / BV) * 100 var totalGrowth = ((final – initial) / initial) * 100; cagrOutput.innerHTML = cagr.toFixed(2) + "%"; totalOutput.innerHTML = "Total Percentage Gain: " + totalGrowth.toFixed(2) + "%"; resultDiv.style.display = "block"; }