CAGR Calculator

1. Enter the beginning value, what the investment was worth at the start.
2. Enter the ending value and the number of years between them.
3. Read the CAGR, the total growth and the absolute gain, all updating as you type.

Each output describes the growth in a different way:

CAGR, the compound annual growth rate, is the constant yearly rate that would grow a starting value into an ending value over a given number of years. It answers a simple question: if the growth had been perfectly steady, what rate would it have been? That makes it the standard way to compare investments over different lengths of time.

Because it assumes smooth growth, CAGR hides the bumpy path in between. An investment that fell 30 percent then recovered can show the same CAGR as one that rose gently, so it is a summary, not the full story.

It divides the ending value by the beginning value, takes the year root to spread the growth evenly, and subtracts one.

In symbols this is CAGR = (end / begin)^(1/t) - 1 where t is the number of years. Taking the tth root is what turns total growth into a single yearly rate.

1. Divide the ending value by the beginning value.
2. Raise the result to the power of one over the number of years.
3. Subtract one and read it as a percentage.

The result is the rate that, compounded each year, connects your two values exactly.

An investment grows from 1,000 to 2,000 over 5 years. The ratio is 2, and the fifth root of 2 is about 1.1487, so CAGR = 2^(1/5) - 1 = 0.1487, or about 14.87 percent a year.

Total growth was 100 percent over the five years, but CAGR spreads that into a steady 14.87 percent annually. The absolute gain is simply 1,000. Notice the CAGR is well below the 20 percent you would get by naively dividing 100 percent by 5, because compounding does part of the work each year.

If a value instead falls from 5,000 to 4,000 in 4 years, the CAGR is negative, about minus 5.4 percent a year, flagging a steady decline.

These two are easy to confuse, and the difference can be large in volatile years.

Because averaging ignores compounding, the simple average is usually higher than the CAGR, and the gap widens with volatility. For a plain percentage change, the percentage calculator is the quicker tool.

Only three inputs drive CAGR, but each shifts it in an important way.

The Time Period

The same total growth spread over more years gives a lower CAGR, because each year needs to do less work.

The Start and End Points

Cherry-picking a low start or a high end inflates CAGR, which is why the chosen window matters so much.

Volatility in Between

CAGR ignores the path, so two very different journeys can share a CAGR; it measures the destination, not the ride.

Negative or Zero Values

CAGR needs a positive starting value, and a value that hits zero cannot be summarised this way.

Comparing Investments

CAGR puts assets held for different lengths of time on the same yearly scale, so you can compare them fairly.

Tracking Business Growth

Revenue, users or profit over several years reduce to one clean growth rate for a report or pitch.

Setting Expectations

Turning a target ending value into a required CAGR shows whether a goal is realistic for the time you have.

1. Dividing Total Growth by Years

That gives the simple average, not CAGR. CAGR uses the year root to account for compounding.

2. Ignoring the Chosen Window

Start and end dates hugely affect the result; a fair CAGR uses a sensible, representative period.

3. Treating CAGR as the Actual Path

It is a smoothed rate. The real investment may have swung wildly in between.

4. Using It on Volatile Short Periods

Over one or two years CAGR can mislead, because a single swing dominates the result.

5. Forgetting Fees and Inflation

A headline CAGR is nominal and gross; real, after-fee growth is lower.

The formula is exact for the two values and the period you enter, but CAGR describes only the endpoints.

CAGR, the compound annual growth rate, is the steady yearly rate that connects a starting value to an ending value over a set number of years. It is the standard way to compare growth over time.

CAGR = (ending value / beginning value)^(1 / years) - 1. This calculator applies it and shows the result as a yearly percentage.

Average return is the simple mean of yearly returns and ignores compounding, so it is usually higher. CAGR compounds, giving the true rate that links start and end.

Yes. If the ending value is lower than the beginning value, the CAGR is negative, showing an average yearly decline over the period.

It depends on the asset, but long-run stock market returns are often around 7 to 10 percent a year. A CAGR well above that is strong; a negative one signals a loss.

Because compounding does part of the work each year. Spreading total growth evenly with the year root gives a lower, more accurate yearly rate than simple division.

No. It uses only the start and end values, so it smooths over every rise and fall in between. Two very different journeys can share the same CAGR.

Use a representative window that is not cherry-picked. Very short periods let a single swing dominate, which can make the CAGR misleading.

No. The calculation runs in your browser, and nothing you enter is sent anywhere unless you Save a result, which stays on this device only.

• Compound annual growth rate (Wikipedia).
• What is CAGR (Corporate Finance Institute).
• Compound interest (Maths Is Fun).