CAGR Calculator
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Enter a beginning value, an ending value and the number of years to calculate the Compound Annual Growth Rate — the single steady yearly rate that connects the two — along with the total growth over the whole period. Everything is computed in your browser.
What CAGR tells you
Compound Annual Growth Rate (CAGR) is the single, steady annual rate that would take an investment from its beginning value to its ending value over a given number of years, assuming it compounded smoothly the whole way. It is one of the most useful summary statistics in finance because it collapses a messy, volatile journey into one comparable number.
The formula is CAGR = (ending ÷ beginning)^(1 / years) − 1, expressed as a percentage. For example, growing $10,000 into $18,000 over five years is a CAGR of about 12.47% per year, even though the actual annual returns along the way were almost certainly uneven.
Why CAGR beats a simple average
Averaging yearly returns is tempting but misleading. Suppose an investment gains 100% one year and loses 50% the next: the simple average is +25%, yet you have exactly the money you started with — a true growth rate of 0%. CAGR, being a geometric mean, correctly reports 0% because it accounts for compounding.
This is why CAGR is the standard way to quote long-run fund and index performance. It answers the practical question "what steady rate did my money actually grow at?" rather than the misleading "what did the yearly figures average to?" The larger the volatility, the bigger the gap between the arithmetic average and the true CAGR.
- CAGR = (ending ÷ beginning)^(1 ÷ years) − 1
- Total growth = (ending ÷ beginning) − 1
- Growth multiple = ending ÷ beginning
- CAGR is a geometric mean, not an arithmetic average
What CAGR hides
CAGR's great strength — smoothing — is also its main limitation. It says nothing about the path taken. Two investments with the same CAGR can have wildly different risk: one may have crept up steadily while the other whipsawed through 40% drawdowns. Always pair CAGR with a measure of volatility such as standard deviation or the Sharpe ratio.
CAGR is also sensitive to the exact start and end points you choose. Beginning or ending near a market peak or trough can flatter or depress the figure dramatically, so a longer window generally gives a more representative rate. Finally, CAGR ignores cash flows in and out; for portfolios with regular deposits, a money-weighted return like IRR is more appropriate.
Frequently asked questions
Can I use CAGR for any starting and ending value?
Yes, as long as the beginning value is positive. It works for investments, revenue, users, or any quantity that grows or shrinks over a whole number or fraction of years.
What if the ending value is lower than the beginning value?
CAGR will be negative, correctly showing the annual rate of decline. The tool displays negative rates in red.
Can the number of years be a fraction?
Yes. If your period is 18 months, enter 1.5 years. The exponent handles fractional periods correctly.
Does CAGR account for dividends or deposits?
No. It only looks at the beginning and ending values. If you added or withdrew money along the way, a money-weighted return such as IRR is more suitable.
Why does a small change in years move the result so much?
The number of years is in the exponent, so it has a strong effect. Make sure the period matches your two values precisely to get an accurate rate.
Is my data private?
Yes. The calculation runs entirely in your browser and none of the values you enter are uploaded or stored.
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