CAGR Calculator
Find the compound annual growth rate between a starting and ending value.
What the CAGR Calculator does
CAGR is the constant annual rate that would take your starting value to your ending value over the period. It is the standard way to compare investments of different lengths, because it strips out the effect of time.
Formula
CAGR = (Ending ÷ Beginning)^(1 ÷ years) − 1
Inputs explained
| Input | Unit | Required | Notes |
|---|---|---|---|
| Beginning value | selected currency | Yes | Accepts more than 0. |
| Ending value | selected currency | Yes | Accepts 0 or more. |
| Number of years | years | Yes | Accepts more than 0, up to 100. |
| Currency | one of 10 options | Optional | — |
How to use it
- Choose Currency.
- Enter Beginning value, Ending value and Number of years.
- Select Calculate.
Worked example
An investment grows from $10,000 to $25,000 over 7 years.
- Beginning
- 10000
- Ending
- 25000
- Years
- 7
(25,000 ÷ 10,000)^(1/7) − 1 = 13.98% CAGR.
Reading the result
- CAGR is the constant annual rate that would have taken the starting value to the ending value over the period. It is a smoothing device, not a description of any year that actually happened.
- Because it uses only the first and last values, two investments with identical CAGR can have had completely different volatility along the way.
- CAGR is always lower than the arithmetic mean of the yearly returns whenever those returns vary — that gap widens with volatility.
Assumptions and limitations
- No deposits or withdrawals during the period. Cash flows in or out make CAGR misleading; use an IRR or XIRR calculation instead.
- Dividends and other distributions are only reflected if they are already included in the ending value.
- The period is treated as an exact number of years.
Common mistakes
- Applying CAGR to a portfolio that received regular contributions, which credits the contributions as investment growth.
- Using a period that starts or ends at an unusual market point, which flatters or damages the figure without telling you anything durable.
- Comparing CAGRs measured over different lengths of time as if they were equivalent.
Frequently asked questions
Why is CAGR lower than the simple average return?
Because losses hurt more than equal gains help. A 50% loss needs a 100% gain to recover, and CAGR reflects that asymmetry while a simple average does not.
When is CAGR misleading?
When cash was added or withdrawn during the period. Use IRR or money-weighted return for those cases.