CAGR Calculator
The compound annual growth rate from a start and end value, or from a series of yearly returns, with the gap between the average return and what was earned.
Result
Compound annual growth rate: 10.2924%
A smoothed rate: the actual path went up and down between the two ends.
- Total return
- 80%
- Growth multiple
- 1.8
https://calcgallery.com/investment-returns/cagr-calculator/
Results are arithmetic on the returns, rates and horizons you enter, not a forecast and not investment, tax or retirement advice. The site supplies no expected return, inflation rate, contribution limit, tax rate or withdrawal rate. Real returns vary from year to year, and fees, taxes and the order of returns all change the outcome. Check anything that matters with a qualified adviser. Read the full disclaimer
How to use the CAGR Calculator
- Enter the value at the start and at the end, and how many years apart they are. Fractions of a year work.
- Or switch to a series and enter each year's return as a percentage.
- Read the compound annual growth rate, and for a series, how far the plain average of the returns overstates it.
The formula
CAGR = (ending value ÷ beginning value)^(1 ÷ years) − 1It is the one steady yearly rate that would have turned the beginning value into the ending value over the same time. From a series of yearly returns it is the geometric mean: multiply together one plus each return, take the n-th root, and subtract one.
Average versus compound
The arithmetic average of yearly returns answers a different question: what was a typical year? The compound rate answers the one that matters for your money: what did I actually earn? The average is never below the compound rate, and the more the returns swing, the bigger the gap. This is why a fund’s average return can look better than what its investors received.
A smoothed number
CAGR hides the path. Two investments with the same CAGR can have taken very different routes, one steady and one lurching, and the route matters if you needed the money partway through.
With your numbers
- CAGR = 1.8^(1 ÷ 6) − 1 = 10.2924%
Quick reference
A smoothed rate: the actual path went up and down between the two ends.
| Example | Compound annual growth rate |
|---|---|
| 10,000 to 18,000 in 6 years | 10.2924% |
| 10,000 to 20,000 in 10 years | 7.1773% |
| 10,000 to 5,000 in 5 years | -12.9449% |
| Flat for 5 years | 0% |
| 10,000 to 11,000 in half a year | 21% |
| Up 50%, then down 50% | -13.3975% |
Common questions about the CAGR Calculator
- Why is the average return higher than the CAGR?
- Because losses and gains do not cancel. Gain 50% and then lose 50%, and the average return is 0%, but 100 becomes 150 and then 75: a quarter of the money is gone, a compound rate of −13.3975% a year. Whenever returns vary, the average of them is higher than the rate actually earned. The gap is called volatility drag.
- How do I compare investments held for different lengths of time?
- That is what CAGR is for. It turns any start and end into a steady yearly rate, so 80% over 6 years (10.2924% a year) can be compared with 21% over half a year, which is 10% in six months compounded to a yearly rate.
- What if I added or withdrew money along the way?
- Then start-and-end CAGR is misleading, because some of the growth was new money. A money-weighted rate, the internal rate of return, handles cash flows in and out; the IRR calculator works it out.
- Can CAGR be worked out for a total loss?
- No. If the ending value is zero or negative there is no rate that turns the start into the end by compounding, and the page says so instead of showing a meaningless number.