Calculate the compound annual growth rate between a starting and ending value over any number of years.
CAGR (compound annual growth rate) is the smoothed yearly rate an investment would need to grow from its starting value to its ending value over a number of years.
A CAGR calculator finds the compound annual growth rate — the single, steady
yearly rate that would take an investment from its starting value to its ending
value over a set number of years. Enter the beginning value, the ending value
and the years, and it returns the CAGR alongside the total growth and total
return.
CAGR is the fairest way to compare investments held for different lengths of
time, because it folds compounding into one clean figure. Just remember it is a
smoothed number: it tells you the average annual pace, not the bumps and dips
that happened along the way.
How to use
Enter the beginning value.
Enter the ending value.
Enter the number of years to see the annual growth rate.
Formula
CAGR is the constant annual rate linking the beginning and ending values.
CAGRCAGR = (Ending / Beginning)^(1 / years) − 1
Worked examples
$1,000 to $5,000 over 5 years
Growing from $1,000 to $5,000 in 5 years is about a 37.97% CAGR, even though the total return is 400%.
Frequently asked questions
Why use CAGR instead of a simple average?
CAGR accounts for compounding, giving the constant yearly rate that connects the start and end values. A simple average ignores the order and compounding of returns.
Does CAGR show volatility?
No. CAGR is a smoothed figure and hides the ups and downs along the way — two investments with very different paths can share the same CAGR.
Can CAGR be negative?
Yes. If the ending value is lower than the beginning value, CAGR is negative, showing the average annual rate of decline.