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CAGR Calculator
Calculate the compound annual growth rate (CAGR) of any investment from its starting value, ending value and holding period.
What CAGR tells you
CAGR is the steady yearly rate that would take an investment from its beginning value to its ending value. It smooths out volatile years, which makes it useful for comparing investments held over different periods.
The CAGR formula
CAGR = (Ending value ÷ Beginning value)^(1 ÷ years) − 1. For example, $10,000 growing to $25,000 over 7 years is a CAGR of about 14%.
How to use this CAGR calculator
Enter the beginning value of an investment, its ending value and the number of years you held it. The calculator returns the compound annual growth rate (CAGR), the total return over the whole period and how long money would take to double at that rate.
Worked example
An investment grows from $10,000 to $20,000 over 6 years. Its total return is 100%, but its CAGR is about 12.2% a year, because (20,000 ÷ 10,000)^(1/6) − 1 ≈ 0.122. CAGR smooths out the ups and downs into a single steady yearly rate, which makes it easy to compare investments held for different lengths of time.
CAGR vs. average annual return
A simple average of yearly returns can be misleading. If an investment gains 50% one year and loses 50% the next, the average return is 0%, yet you've actually lost 25% of your money. CAGR reflects what really happened to your balance. Note that CAGR ignores the path: two investments with the same CAGR may have had very different volatility, and it doesn't account for money added or withdrawn along the way.
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Frequently asked questions
Is CAGR the same as average annual return?
No. A simple average of yearly returns overstates growth when returns are volatile. CAGR reflects the actual compounded result.
Does CAGR include contributions?
No. CAGR assumes a single starting amount. If you added money along the way, use a money-weighted return instead.
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