CAGR Calculator
Find the smoothed annual growth rate between a starting and ending investment value over any time period.
How the CAGR Calculator Works
Compound Annual Growth Rate (CAGR) smooths an investment's return over multiple years into a single annualized percentage — useful for comparing investments that grew unevenly year to year on a like-for-like basis.
Formula
CAGR = (End Value / Start Value)^(1/years) − 1- Start Value — value at the beginning of the period
- End Value — value at the end of the period
- years — length of the holding period, in years
Unlike a simple total-return percentage, CAGR accounts for the compounding effect of time. Two investments with the same total return over different holding periods will show different CAGRs — the one that got there faster has the higher CAGR.
CAGR assumes smooth, steady growth. It does not capture volatility along the way — an investment that fell sharply and then recovered can have the same CAGR as one that grew steadily, even though the ride was very different.
Worked Example: $10,000 growing to $25,000 over 8 years
- Start = $10,000, End = $25,000, years = 8
- Ratio = 25,000 / 10,000 = 2.5
- CAGR = 2.5^(1/8) − 1 ≈ 1.1214 − 1
CAGR ≈ 12.1% per year.
Frequently Asked Questions
Can CAGR be negative?
Yes — if the end value is lower than the start value, CAGR is negative, representing the annualized rate at which the investment declined over the period.
Is CAGR the same as average annual return?
No. A simple average of yearly returns can overstate performance when returns are volatile, because it ignores compounding. CAGR reflects the actual annualized growth rate needed to get from the start value to the end value.