How to Calculate CAGR in Excel | Compound Annual Growth Rate

CAGR (compound annual growth rate) is the return required to grow an investment's beginning value to its future value over a given number of years. CAGR is the measure of an investment's growth over time. CAGR includes compound interest and is thus superior to average annual returns.

You can calculate the CAGR either from annual returns or from account balances.

CAGR Topics in this video:
📌 Total Return
📌 Average Annual Return
📌 Compound Annual Growth Rate (CAGR)
📌 Calculate CAGR in Excel using the Formula
📌 Calculate CAGR in Excel using the RATE Excel Function
📌 Calculate CAGR in Excel using the RRI Excel Function

MENTIONED IN THIS VIDEO

__________

LEARN MORE

__________

BOOKS I RECOMMEND

__________

SAY HI ON SOCIAL

__________

MY GEAR

__________

CHAPTERS

00:00 Introduction
00:45 Annual Returns
01:30 Total Return
02:25 Average Return
03:09 CAGR Formula
05:40 CAGR Rules
06:15 CAGR from Annual Returns
08:45 RATE and RRI Functions
10:40 CAGR from Account Balances
12:25 CAGR from Account Balances with Annual Investments
14:00 CAGR from Account Balances with Annual Withdrawals

__________

ABOUT ME

__________

DISCLAIMERS & DISCLOSURES

This content is for education and entertainment purposes only. Finally Learn does not provide accounting, tax, financial planning, or investment advice. The information is being presented without consideration of the investment objectives, risk tolerance, or financial circumstances of any specific investor and might not be suitable for all investors. Past performance is not indicative of future results. All investing involves risk, including the possible loss of principal.

#finallylearn #jeffmankin #cagr

364 Subscribers
04/03/2021

[IwasRetired]

Thanks, your last example is exactly what I was looking for. I have an investment called "Retirement, " in which I've invested $750K, and have been drawing out $50K in expenses and taxes. No additional investments, just outflows. And the Ending Value after 5 years is $1M, so CAGR for my example is 11.92%. I've been forgetting about the cash flows and thus getting a much lower CAGR with simple PV, FV, zero payment formula. Now when I realize the investment has generated cashflows, and still grew, I feel better. I was searching for the answer on whether to add received cashflow to the Ending Value or plug it into the empty PMT spot in this formula. Your explanation was spot on.

[btwfbtwf]

That was really good. I haven't fully grasped it so I'm going to watch it again (and probably a few times more) to fully comprehend it - and then try it out. Q, What if additional funds are added over several years but are of different annual amounts? Say, for example, in the first year $1, 000 was added, and in the second year the additional / added sum was $1, 500, then, in following years - the third year $2, 000 was added, the fourth year $2, 500 added - Could that be calculated and, if so, how?

[mihaigrigore]

Thank you for a very good, clear explanation, Jeff!!!

[fatemeazizi]

Why is CAGR important for financial analysis?