CAGR calculator
Divide 72 by a growth rate and you get roughly the years to double: 72 ÷ 8 gives nine years, against an exact 9.006. It works well between about 4% and 15% and drifts either side. The exact figure — log 2 divided by log of one plus the rate — is in the row above, but the rule of 72 has survived for six centuries because it is close enough and you can do it in your head.
CAGR is the ending value divided by the starting value, raised to one over the number of years, minus one. Ten thousand growing to eighteen thousand over six years is a CAGR of 10.29% a year, and would double every 7.08 years at that rate.
How to calculate CAGR
CAGR describes a smooth path that almost never happened. It is the constant rate that would have produced the same endpoints, which makes it excellent for comparison and misleading as a description of the journey — an investment that fell 40% and then trebled has a healthy CAGR and was a nightmare to hold. Anyone using CAGR to compare volatile assets should look at the drawdowns alongside it, because the same CAGR can come from wildly different experiences.
Questions
The constant annual rate that would take the starting value to the ending value over the period.