CAGR Calculator
CAGR — compound annual growth rate — is the steady yearly rate that grows a beginning value into an ending value over a set number of years. It equals (end ÷ begin)1/years − 1. This calculator gives the CAGR plus the total return and growth multiple.
Use this CAGR calculator to measure how fast an investment really grew. Enter the starting value, the ending value and the number of years, and it returns the compound annual growth rate — the single smooth rate that connects the two — along with the total return over the whole period.
Enter the values and the number of years, then press Calculate.
How the CAGR calculator works
Real investments rarely grow in a straight line — a great year, a flat one, a loss — but to compare them you need a single figure. CAGR provides it by asking: what one steady rate, compounded every year, would have taken the beginning value to the ending value over the number of years? Mathematically it divides end by begin, takes the year-th root, and subtracts one. The result is the smooth annual rate that ties the two endpoints together.
Because it accounts for compounding, CAGR is more honest than a simple average of yearly returns, which quietly overstates growth. It is the standard way to describe how fast a fund, stock or business figure has grown. Pair it with the investment growth calculator to project forward, the ROI calculator for total return, and the compound interest calculator to see compounding at work.
The CAGR formula
- Beginning — value at the start
- Ending — value at the end
- Years — length of the period
Why CAGR beats the simple average
Averaging yearly returns is tempting but misleading, because it ignores the maths of compounding and losses. The classic example: gain 50% one year, lose 50% the next, and the simple average is 0% — yet you are actually down 25%, because the loss falls on a bigger balance. CAGR captures that reality: it is the true equivalent rate that connects where you started to where you ended. Whenever you see a fund quote its "annualized return," that is CAGR doing the honest accounting.
Know what CAGR hides
Its strength — collapsing everything into one number — is also its blind spot. CAGR says nothing about the ride: a calm, steady climb and a stomach-churning rollercoaster can share the same CAGR. It also assumes no money was added or withdrawn along the way, so it does not equal your personal return if you were making regular contributions. And a CAGR over a short or carefully chosen window can flatter or mislead. Read it alongside a sense of the volatility and the time period involved.
CAGR vs average return: why they differ
A simple average of yearly returns and the CAGR can tell very different stories, and the difference trips up a lot of investors. The average just adds each year's return and divides, which ignores compounding and the drag that volatility creates. CAGR is the single smoothed rate that actually takes you from the starting value to the ending value. Here is the classic example: gain 50% one year and lose 50% the next, and the average looks like a harmless 0% — but $1,000 grows to $1,500 and then falls to $750, a real loss, and the CAGR correctly shows about −13.4% a year. Whenever returns bounce around, CAGR is the honest number and the plain average flatters the result.
Estimate only — not investment advice. CAGR ignores volatility and interim cash flows, and past growth does not predict future results.
How to use it & key terms
Enter the beginning value, ending value and number of years, then press Calculate to see the CAGR and total return.
| Term | What it means |
|---|---|
| CAGR | The steady annual rate connecting start and end values. |
| Beginning value | What the investment was worth at the start. |
| Ending value | What it is worth at the end. |
| Total return | The overall percentage change across the whole period. |
| Growth multiple | Ending value ÷ beginning value. |
| Annualized return | A per-year rate; equal to CAGR with no cash flows. |
Sources & methodology
The compound annual growth rate is calculated as the ending value divided by the beginning value, raised to the power of one divided by the number of years, minus one, then expressed as a percentage. The total return is the ending value divided by the beginning value minus one, and the growth multiple is simply the ending value divided by the beginning value. CAGR assumes smooth compounding and no interim contributions or withdrawals, so with ongoing cash flows a money-weighted return would differ. This is the standard definition used across finance.
Sources: Standard compound annual growth rate (CAGR) definition used in finance and investing.
From past growth to future plans
CAGR is usually read as a report card on the past, but its real value often shows up when you turn it toward the future. Because it reduces any journey to a single annual rate, it lets you line up investments that ran over different lengths of time on the same footing — a holding that grew over three years and another that grew over eleven become directly comparable once each is expressed as a yearly rate. That is more honest than staring at total returns, where a bigger headline gain can simply reflect a longer runway rather than better performance.
The catch is that a rate drawn from history is not a promise about tomorrow. A CAGR measured from a low starting point to a high ending point can look spectacular purely because of where the window begins and ends; shift the start date by a year or two and the same investment can tell a very different story. Treat any past CAGR as one clue about a range of plausible futures, not a dial you can set and expect the market to obey.
Inflation deserves a place in the picture too. A nominal CAGR describes how many more currency units you hold; a real CAGR describes how much more you can actually buy. Subtract your expected inflation rate from the nominal figure and you get a rough real growth rate — the number that matters for long-term goals like retirement, where preserving purchasing power is the whole point. It is the same reason two investments with identical nominal rates can leave you in very different real positions if they span different inflation eras.
Finally, CAGR works just as well in reverse. Instead of asking what rate an investment earned, you can ask what rate a goal demands: feed in where you are, where you want to be, and how many years you have, and the required annual growth falls out. That flips the tool from scorekeeper to planner, much like a savings goal calculator works backward from a target. If the rate a goal needs looks far above what your investments have historically delivered, the honest response is to save more, allow more time, or temper the target — not to hope for an unusually generous run of returns.
Frequently asked questions
What is CAGR?
CAGR stands for compound annual growth rate. It is the single steady yearly rate at which an investment would have grown from its starting value to its ending value over a period, assuming the growth compounded smoothly. Real returns bounce around from year to year, but CAGR smooths them into one comparable number, which is why it is the standard way to describe how fast an investment, a fund or a business metric has grown over time.
How do you calculate CAGR?
Divide the ending value by the beginning value, raise the result to the power of one divided by the number of years, and subtract one. For example, growing $10,000 into $25,000 over 8 years is (25,000 ÷ 10,000)^(1/8) − 1, which works out to about 12.1% per year. Multiply by 100 to express it as a percentage. This calculator does the maths for you from the three inputs.
Why use CAGR instead of the average return?
A simple average of yearly returns overstates how much you actually made, because it ignores compounding and the drag of volatility. If an investment gains 50% then loses 50%, the average is 0% but you are actually down 25% — and CAGR correctly reflects that loss. CAGR gives the true equivalent annual rate that ties your starting and ending values together, which is why analysts prefer it for measuring and comparing real growth.
What is a good CAGR?
It depends on the asset and the risk. For a diversified stock portfolio, a long-run CAGR in the high single digits to low double digits before inflation is broadly in line with historical market averages. A higher CAGR usually comes with more risk or a shorter, luckier window. Judge a CAGR against a relevant benchmark and the risk taken to earn it, rather than chasing the biggest number in isolation.
What are the limitations of CAGR?
CAGR only looks at the beginning and ending values, so it hides all the volatility in between — a smooth 8% and a wild ride that ended at 8% look identical. It also assumes no money was added or withdrawn along the way; if you made ongoing contributions, CAGR of the balance will not equal your personal rate of return. And a CAGR over a short or cherry-picked period can be misleading. Use it alongside a view of risk and cash flows.
What is the difference between CAGR and annualized return?
They are essentially the same idea. CAGR is the annualized growth rate between two points in time, computed purely from the start value, end value and number of years. "Annualized return" is the general term for turning a total return over any period into a per-year rate, and when there are no interim cash flows it is calculated exactly like CAGR. The words are often used interchangeably in investing.
How do you project a future value with CAGR?
Turn the formula around. To project a future value, multiply the starting amount by one plus the CAGR, raised to the number of years: Future = Start × (1 + CAGR)^Years. For example, $10,000 growing at 8% for 10 years becomes 10,000 × 1.08^10, or about $21,600. Pick a realistic annual rate and the formula shows what your money could grow to, though real returns vary from year to year rather than following a smooth line.
How do you calculate CAGR in Excel?
There are two easy ways. You can type the formula directly as =(End/Start)^(1/Years)-1, where End and Start are the ending and beginning values and Years is the number of years, then format the cell as a percentage. Or you can use Excel's built-in RRI function, =RRI(Years, Start, End), which returns the same compound annual growth rate. Both give the exact CAGR; the RRI function is just quicker and less error-prone for most people.