CAGR Calculator
Use this CAGR calculator to turn a beginning and ending value into one smoothed annual growth rate, to compare investments and measure yearly returns.
What it does
The CAGR Calculator finds the Compound Annual Growth Rate, the single smoothed yearly rate that would turn a starting value into an ending value over a set number of years. It strips out the ups and downs of individual years and expresses growth as one steady annual percentage.
Data sources & parameters
This calculator uses standard financial formulas and runs entirely in your browser. It needs no external rate data — your result is computed only from the values you enter above.
We always strive to use the latest data for every variable so our results and reports are as accurate as possible. Even so, errors are possible — you should not rely on this tool or its report alone, and we accept no liability for any decision made based on it.
The formula
CAGR = ((Ending value ÷ Beginning value)^(1 ÷ years) − 1) × 100
How it works
You enter the beginning value, the ending value and the number of years the money was invested. The tool divides the ending value by the beginning value, takes the year-th root of that ratio, subtracts one and expresses the result as a percentage. It also reports the plain total return over the whole period.
Where it is used
- Comparing the annualised performance of different investments
- Turning a multi-year total return into one yearly rate
- Judging whether a fund, stock or business grew steadily over time
Worked example
An investment grows from $10,000.00 to $20,000.00 over 7 years. That is a total return of …, but expressed as a smoothed yearly rate the CAGR is …, meaning the money grew as if it earned that same percentage every single year.
What the CAGR calculator does
The compound annual growth rate, or CAGR, is the steady yearly rate that would turn a beginning value into an ending value over a set number of years. Enter the beginning value, the ending value and the number of years, and the calculator returns the CAGR and the total return, with a chart of the smoothed compounding path.
A fund that returned 60 percent over four years and a stock that returned 45 percent over three cannot be compared fairly by their totals, because the periods differ. Expressed as a CAGR, both are annual rates on the same basis.
How CAGR is calculated
CAGR = ((Ending value ÷ Beginning value)^(1 ÷ years) − 1) × 100
Dividing the ending value by the beginning value gives the total growth ratio. Raising it to the power of one divided by the number of years finds the constant yearly multiplier that produces that ratio, and subtracting one and multiplying by 100 turns it into a percentage.
If an investment grows from 10,000 to 20,000 over seven years, the ratio is 2. The seventh root of 2 is roughly 1.1041, so the CAGR is about 10.41 percent, while the total return is 100 percent because the money doubled.
CAGR versus total return
Total return tells you how much bigger the money got from first day to last; CAGR tells you how fast it grew on average each year. Promotional material often quotes a large total return without the period. "Up 150 percent" sounds impressive, but over 20 years it is only about 4.7 percent a year, barely ahead of a good savings account.
Why CAGR is useful
Because it reduces everything to a per-year rate, CAGR lets you compare assets held for different lengths of time. It is used for fund performance, company revenue growth, portfolio returns and the growth of whole economies. Once you know an investment grew at, say, 8 percent CAGR, you can use that rate in other tools, in retirement projections, or against inflation to judge real growth. Over long periods a diversified stock index has historically delivered high single-digit CAGRs, with cash and bonds lower; a figure far above that may mean extra contributions inflated the ending value.
Limits
CAGR assumes the same growth every year, which almost never happens. A portfolio that fell 40 percent one year and soared the next can have the same CAGR as one that rose quietly throughout, although the experience, and the risk of selling at the wrong moment, were very different.
CAGR also ignores money added or withdrawn along the way. If you kept contributing, the ending value includes those deposits and the CAGR overstates the return on your original capital; a money-weighted return is more accurate for portfolios with regular contributions.
Beyond investments
The same measure applies to anything that grows or shrinks over time. Analysts use it to summarise growth in revenue, users or profit: a company that grew sales from one million to four million over five years achieved a CAGR of roughly 32 percent. It also works for how fast the price of a house, a collectible or a small business has risen, or how quickly costs such as tuition or rent have climbed. With a start value, an end value and a number of years, you can calculate it.
About This CAGR Calculator
Use this CAGR calculator to get an instant estimate based on the figures you enter. Adjust the inputs above to match your situation, or browse all our calculators to plan your next step.
Frequently asked questions
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