Compound Annual Growth Rate (CAGR) Calculator
Calculate CAGR from start value, end value and years. See the implied annual growth rate and a year-by-year value chart. Free, instant.
How to use this tool
- Enter start value, end value and number of years in the fields above.
- Results update instantly as you type — or click Calculate.
- Read your cagr and the full breakdown beneath it.
CAGR answers: at what constant annual growth rate would an investment have grown from start to end? Formula: CAGR = (End/Start)^(1/n) − 1, where n is the number of years.
⚠ 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 = (End Value / Start Value)1/n − 1
Total return = (End Value / Start Value − 1) × 100%
Where n = number of years.
How it works
CAGR is the single constant annual growth rate that would take the start value to the end value over n years if applied uniformly each year. It is calculated by taking the nth root of the end-to-start ratio and subtracting one. CAGR smooths out year-to-year volatility into one representative figure; it does not describe how an investment actually grew each year, and past CAGR does not guarantee future returns.
Worked example
- Start value = 1000, end value = 2000, years n = 5.
- Ratio = 2000 / 1000 = 2.0.
- CAGR = 2.0^(1/5) − 1 = 2.0^0.2 − 1 = 1.14870 − 1 = 0.14870.
- CAGR as percentage = 0.14870 × 100 = 14.87%.
- Total return = (2000 / 1000 − 1) × 100% = 100.0%.
CAGR: 14.87%; Total return: 100.0%.
Common mistakes to avoid
- Comparing assets where one end value includes reinvested dividends and the other does not, making the CAGR comparison misleading.
- Applying CAGR to a single volatile asset over a 2-3 year window and treating it as a reliable long-term growth rate — CAGR smooths volatility and can be heavily distorted by the choice of start and end dates.
- Confusing CAGR with the arithmetic average of annual returns — the arithmetic average is always higher than CAGR when returns vary, so they should not be used interchangeably as performance metrics.
Key terms
- CAGR (Compound Annual Growth Rate)
- The steady annual rate at which an investment would need to grow to reach its end value from its start value in the given number of years.
- Start value
- The initial value of the investment or metric at the beginning of the measurement period.
- End value
- The final value at the end of the measurement period, used together with the start value to compute CAGR.
- Total return
- The overall percentage gain (or loss) from start to end, regardless of how long the period lasted: (end/start − 1) × 100%.
- nth root
- To find CAGR, raise the ratio end/start to the power 1/n (the nth root), which undoes n years of compounding to find the per-year rate.
Frequently asked questions
- Does CAGR show year-to-year volatility?
- No — it's a smoothed rate. Two investments with the same CAGR can have very different year-to-year swings. It only captures the start and end points.
- Is CAGR the same as annualised return?
- Yes for a buy-and-hold single investment. For portfolios with cash flows (contributions / withdrawals) you need the IRR or money-weighted return instead.