Reverse CAGR
Calculator
Estimate the Final Value of an Investment,
Based on Compounded Annual Growth Rate.
Final Value
(Doubles in Yrs)
Initial Investment
CAGR (%)
Years
Months
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CAGR = Compounded Annual Growth Rate
Correct
Can I calculate CAGR using this tool?
Correct
How to Use Reverse CAGR Calculator
When you know the compound annual growth rate (CAGR), you can use the Reverse CAGR Calculator to predict the future value, also known as the Final Amount or Maturity Value, of an investment.
Simply enter these and the calculator will instantly output the total worth of your investment in real-time, allowing you to make educated financial decisions based on your investment plan.
You can simply predict the end value of an investment using this calculator by filling in some key data such as the starting investment amount, CAGR rate, and time duration. Reverse CAGR Calculator is a quick and accurate approach for predicting the growth of your investments.
For example, using an initial investment amount of $10,000 in four years and two months time, with a CAGR of 25% ...
You'd get a final value of $25,339.13
The calculator also gives you an approximate time of when your investment will double in the given parameters. In your example, it would be 2.88 Yrs. You can then simply click the "Copy Value" button to copy the Final Value in Dollars.
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What is CAGR?
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CAGR is a measure of an investment’s average annual growth rate over a specific time period, usually more than one year. CAGR considers compounding, which implies that the investment’s gains are reinvested each year to create even higher returns in the future.
CAGR stands for = Compound Annual Growth Rate.
It’s only computed for a specific time period. An investment’s performance in the future may differ from its performance in the past. CAGR does not account for inflation. This indicates that if inflation is significant, the real returns on an investment may be lower than the CAGR. CAGR is not a risk indicator. A high CAGR investment may also have a high amount of risk.
Let’s say you invest $100 in a mutual fund that grows by 5% per year for 3 years. At the end of the 3 years, your investment will be worth $115.76. The CAGR for this investment would be 5.2%.
Here is the calculation:
CAGR = (115.76 – 100) / 100 × (100/3) = 5.2%
The Reverse CAGR Formula
The reverse CAGR formula is used to calculate the ending value of an investment given the beginning value, the number of years, and the CAGR. The formula is:
Final Value = Initial Investment * (1 + CAGR) ^ Years
What’s the Use of Reverse CAGR?
Reverse CAGR is a financial metric that is used to calculate the rate at which an investment must grow in order to reach a target value in a specified number of periods. Reverse CAGR is useful for a variety of financial planning purposes, like:
- Compare Investments. Want to choose between a bond and a mutual fund? Check their maturity values to see which one might grow your money more.
- Time Your Investments. Planning to retire in a decade? Find an investment with a maturity date that matches your timeline.
- Calculate Returns. Ever heard of Yield to Maturity (YTM)? Knowing maturity values helps you figure out that investment magic.
- Make Informed Moves. If you’re thinking of selling early, the maturity value can give you a sneak peek at your potential earnings.
The Rule of 72
The Rule of 72 is a rough estimate of how long it takes for an investment to double in value at a given annual rate of return. To use the rule, you simply divide 72 by the annual rate of return. For example, if an investment earns 8% annually, it will take approximately 9 years to double (72 / 8 = 9).
It can be a useful tool for getting a general idea of how long it will take for an investment to grow.
If you invest $100 in a savings account that earns 2% interest annually, it will take 72 / 2 = 36 years for your investment to double to $200.
These are just a few examples of the Rule of 72. The rule can be applied to any investment or savings goal, and it can be a helpful tool for understanding the power of compounding.
