Reverse CAGR Calculator

What is Reverse CAGR?

"Reverse CAGR" involves working backward from the traditional CAGR calculations to uncover different insights. Think of it as taking the CAGR formula on a detour, exploring alternative routes to gain a more comprehensive view of financial growth.

While not a universally defined term, "Reverse CAGR" typically manifests in these three ways:

• Finding the Starting Point: Imagine you know the desired ending value of an investment, the CAGR needed to reach it, and the investment timeframe. Reverse CAGR allows you to calculate the initial investment amount required to achieve that goal.
• Determining the Growth Path: You might have a current investment and a specific target value in mind. Reverse CAGR helps you determine the required CAGR to reach that target within the desired timeframe.
• Analyzing Declining Growth Trends: This application involves observing decreasing CAGR values over consecutive periods. While not strictly a "reverse" calculation, it indicates slowing growth and warrants further investigation into the underlying factors.

Let's illustrate with a scenario: You aspire to amass $100,000 in 10 years, assuming a 7% CAGR. Using "Reverse CAGR," we can determine the initial investment needed:

Starting Value = Ending Value / (1 + CAGR)^Number of Years
Starting Value = $100,000 / (1 + 0.07)^10
Starting Value ≈ $50,834.93

So, starting with roughly $50,834.93 and achieving a consistent 7% CAGR over 10 years would land you at your target of $100,000.