CAGR is the abbreviation of Compound Annual Growth Rate We define CAGR as a business and investing specific term for the smooth annualized gain of an investment over a given time period. For more information please check our CAGR Calculator. So, what is Reverse CAGR? If you know the average return rate of an investment instrument you can calculate final amount (future amount) of your investment with this calculator. Simply this is the reverse of the CAGR Calculator, it stack up the earnings per period according your growth rate and tells you the amounts for the end of each period and eventually the Maturity Value which is the final capital.
This was also mentioned in the CAGR Calculator description and need to emphasise again: CAGR assumes the growth of capital is linear and smooth. It is, most of the times, not in reality. Assume you have 10% CAGR on a stock during 10 years period. It can fall 50% for first year, grow rapidly with 30% next 5 years than slow down... etc. In this scenario you should be aware of these kind of fluctuations and prepare yourself accordingly. A lot of investors taking CAGR values too seriously and expect a solid return every year and get disappointed at some point.
Examples here are actually pretty close to the results you can get from amortization schedules or savings compound interest calculators. It is because for Reverse CAGR Calculator you provide the growth rate, in the case of savings the interest rate. But thinking in broader perspective and different investment instruments CAGR is the right term to use and give a high level understanding of the values. Given that lets assume we have a 12% CAGR from an investment of 100000$ and want to see the compound growth of investment.