Investment CAGR Calculator
Turn a starting value, an ending value and a holding period into the compound annual growth rate — the smoothed yearly return.
How it works
CAGR = (ending ÷ beginning)^(1 ÷ years) − 1 · Total return = ending ÷ beginning − 1
CAGR is the single constant yearly rate that would carry the beginning value to the ending value over the period, as if it grew by the same percentage every year. It smooths away the bumps of a volatile path into one comparable number, which is why it is the standard way to compare investments of different lengths. Note it says nothing about the ride — two investments with the same CAGR can have wildly different year-to-year swings.
Worked example
An investment that grows from $10,000 to $25,000 over 8 years has a growth multiple of 2.5. Its CAGR is 2.5^(1/8) − 1 ≈ 12.1% a year, even though the actual annual returns along the way likely varied a lot.
Frequently asked questions
How is CAGR different from average return?
A simple average of yearly returns ignores compounding and is skewed by volatility — it overstates the result. CAGR is the geometric mean, the true compounded rate, and is always less than or equal to the arithmetic average.
Does CAGR account for deposits or withdrawals?
No. CAGR assumes a single amount grew untouched from start to end. If you added or removed money along the way, you need a money-weighted return like IRR or XIRR instead.
Can CAGR be negative?
Yes. If the ending value is below the beginning value, the CAGR is negative, representing the constant annual rate of loss over the period.
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Educational estimate, not investment advice. Returns are hypothetical and not guaranteed.