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I have been posting about CAGR for a couple months now. Over the past 13 years, $100 in Bitcoin has turned into almost 3 million. $100 in gold over the past 13 years has turned into $213. $100 in the S&P 500 over the past 13 years has turned into $436. Invest Answers took my data and then then expanded it in to gold and the S&P. This is their breakdown.

CAGR’s true power emerges over time because of compounding. While a 12% or even 61% annual growth rate might not seem life-changing in a single year, the table shows how it can transform a small investment into a fortune over a decade or more.

The key to CAGR’s power lies in compounding. Gold was exciting the last 12 months but you will see over last 14 years was FAR LESS than even the S&P500! Let’s look at the table to see this in action:

Example 1: Bitcoin

1-year CAGR: 61%

$100 grows to $161

5-year CAGR: 62%$100 grows to $1,115.77

13-year CAGR: 115%

$100 grows to $2,997,490.39

Even though the CAGR for Bitcoin fluctuates (e.g., 61% in year 1, 62% in year 5, 115% in year 13), the long-term effect is staggering. After 13 years, $100 turns into nearly $3 million because each year’s growth builds on the previous years’ gains. This is why even a high but consistent growth rate can lead to exponential results over time.

Example 2: Gold

1-year CAGR: 44%

$100 grows to $144

5-year CAGR: 14%

$100 grows to $192.54

13-year CAGR: 6%

$100 grows to $213.29

Gold’s CAGR is much lower than Bitcoin’s, and its growth is more modest. However, even a 6% CAGR over 13 years still more than doubles the initial $100, showing how compounding works even with smaller growth rates over long periods.

Example 3: S&P 500

1-year CAGR: 12%

$100 grows to $112

5-year CAGR: 14%$100 grows to $192.54

13-year CAGR: 12%

$100 grows to $436.35

The S&P 500 has a relatively stable CAGR (around 11-14%). While it doesn’t match Bitcoin’s explosive growth, it still turns $100 into $436.35 over 13 years—a more than 4x increase—demonstrating steady, reliable compounding.

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Discussion

Quinton Bahringer 7mo ago

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