CAGR Calculator
Calculate the compound annual growth rate of an investment.
How to use this tool
- Enter starting value, ending value and years in the fields above.
- Results update instantly as you type — or click Calculate.
- Read your cagr and the full breakdown beneath it.
Calculate the compound annual growth rate of an investment.
⚠ This tool provides general estimates for education only and is not financial, tax or legal advice. Figures may not reflect your situation — verify with a qualified professional.
Formula
CAGR = ((Ending Value ÷ Beginning Value)1 ÷ Years − 1) × 100
CAGR (%) = (end ÷ begin)1/n − 1) × 100
How it works
Compound Annual Growth Rate (CAGR) expresses the rate at which an investment would have grown if it had grown at a steady rate each year. This calculator takes the ratio of the ending value to the starting value, raises it to the power of one divided by the number of years (the n-th root), subtracts one, and multiplies by 100. This smooths out year-to-year volatility into a single annualised growth figure.
CAGR represents a theoretical steady rate and does not reflect actual year-by-year performance or account for contributions and withdrawals made during the period.
Worked example
- Starting value = $100; Ending value = $200; Years = 1
- Ratio = $200 ÷ $100 = 2
- CAGR = (21/1 − 1) × 100 = (2 − 1) × 100 = 100%
CAGR = 100%
Common mistakes to avoid
- Using calendar years rather than exact fractional years when the investment period is not a whole number — e.g., 18 months should be entered as 1.5 years.
- Setting beginning value to zero or a negative number, which makes the formula undefined (division by zero or a complex number result).
- Confusing CAGR with average annual return: a stock up 50% then down 33% has 0% CAGR but an 8.5% arithmetic average — only CAGR reflects actual ending wealth.
Key terms
- CAGR
- Compound Annual Growth Rate — the hypothetical constant annual rate that takes a beginning value to an ending value over a given number of years.
- N-th root
- The mathematical operation that reverses compounding; raising a number to the power 1/n finds the per-period rate behind overall n-period growth.
- Absolute return
- The total percentage change from start to end, without annualising; CAGR converts this to a per-year figure.
- Volatility
- Year-to-year fluctuation in returns; CAGR smooths this out into one representative annual figure.
Frequently asked questions
- What does a CAGR of 10% mean in practice?
- It means the investment grew at an equivalent steady rate of 10% per year. $10,000 at 10% CAGR for 10 years reaches approximately $25,937.
- Can CAGR be negative?
- Yes — if the ending value is less than the beginning value, CAGR is negative, indicating the investment shrank on an annualized basis.
- Is CAGR the same as annualized return?
- CAGR and annualized geometric return are the same concept. Both express the constant growth rate that turns the starting value into the ending value over the given period.