CAGR Calculator (Compound Annual Growth Rate)
Enter what an investment started at, what it ended at, and over how many years, and this tool returns the compound annual growth rate (CAGR) — the smooth yearly rate that would have produced the same result. It turns a bumpy ride into one clean annualized number.
How it works
What CAGR is and why it beats a simple average
CAGR (compound annual growth rate) is the single yearly rate that, compounded each year, takes a starting value to an ending value. A plain arithmetic average treats +50% then −50% as 0%, yet you actually end up down. CAGR respects compounding, so it lets you compare investments of different lengths fairly.
The formula
CAGR = (ending value ÷ starting value)^(1 ÷ years) − 1. The total return is (ending ÷ starting − 1), and the growth multiple is ending ÷ starting, shown like 2.0x.
A worked example
Say 10,000 grows to 20,000 over 10 years. The growth multiple is 2.0x and the total return is +100%. The CAGR is 2^(1/10) − 1 = about 7.18%. In other words, compounding at 7.18% a year produces the same doubling.
Caveats
- CAGR smooths over volatility and tells you nothing about how bumpy the path was in between.
- It is a point-to-point measure based on just two dates, so it ignores the risk of the journey.
- A high past CAGR is no guarantee that the future will match it.
Read next
How compounding grows your money — the basics →
Frequently Asked Questions
How is CAGR different from the average annual return?
The average annual return (arithmetic mean) simply adds each year and divides, ignoring compounding. CAGR is a geometric mean that respects compounding, so it is always less than or equal to the arithmetic mean and reflects the growth you actually keep.
Is CAGR the same as IRR (internal rate of return)?
No. CAGR looks only at the start and end, two points in time. IRR also accounts for the timing of cash flowing in and out along the way. If you add or withdraw money during the period, IRR is the more accurate measure.
Does CAGR include dividends or contributions?
Not by itself. CAGR is a point-to-point calculation using only the starting and ending value. If dividends were reinvested, their effect should already sit in the ending value; if you added new money along the way, CAGR will overstate growth and IRR is the right tool.
Can CAGR be negative?
Yes. If the ending value is lower than the starting value, CAGR is negative and shows the average yearly rate at which the investment shrank.
Do the years have to be a whole number?
Not in the formula — it accepts fractional years happily. This calculator rounds the input to whole years to keep entry simple, but the underlying math works for any period.
Why not just divide the total return by the number of years?
That overstates the rate because it ignores compounding. Dividing 100% by 10 years suggests 10% a year, but the true compound rate is about 7.18%. Compounding lets a smaller yearly rate reach the same finish.
This calculator is an educational estimate, not individual investment advice. It does not account for taxes, fees, or interim cash flows. Past growth does not guarantee future results.