CAGR, the compound annual growth rate, is the constant yearly rate at which a value would have grown from its start to its end over a period, as if it grew steadily each year. It smooths out ups and downs into one number.

How is CAGR calculated?

CAGR = (ending value ÷ beginning value)^(1 ÷ years) − 1. For $10,000 growing to $18,000 over 5 years, that is (1.8)^(1/5) − 1 ≈ 12.46% per year.

How does CAGR differ from average return?

A simple average of yearly returns ignores compounding and can overstate growth. CAGR accounts for compounding, so it reflects the true equivalent annual rate over the whole period.

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Can CAGR be negative?

Yes. If the ending value is lower than the beginning value, the growth rate is negative — the constant annual rate at which the value shrank over the period.

Does CAGR account for deposits or withdrawals?

No. It assumes a single lump sum left untouched for the whole period. If you added or withdrew money along the way, use a money-weighted return instead.

Why not just use the average return?

Averaging yearly returns ignores compounding and is skewed by volatility — a +50% then −50% year averages to 0% but actually loses money. CAGR reflects the real compounded outcome.

CAGR Calculator

Year	Value
0	$10,000.00
1	$11,247.46
2	$12,650.54
3	$14,228.64
4	$16,003.61
5	$18,000.00

How to use CAGR Calculator

The CAGR calculator finds the compound annual growth rate — the steady yearly rate that would take a value from its starting point to its ending point over a given number of years. Enter a beginning value, an ending value, and the period, and it returns the CAGR along with the total growth and the growth multiple. CAGR is the standard way to compare investments and business metrics on an equal footing, because it folds all the ups and downs into a single annual figure. Everything runs in your browser.

Enter the beginning value.
Enter the ending value.
Enter the number of years.
Read the CAGR, total growth, and multiple.

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CAGR versus average return

A common mistake is to average yearly percentage returns, but that overstates growth whenever returns vary. Consider a value that rises 50% one year and falls 50% the next: the simple average is 0%, yet $100 becomes $150 and then $75 — a real loss of 25%. CAGR captures this correctly because it is based on the actual start and end values, not the individual years. This is why fund factsheets, annual reports, and analysts quote CAGR rather than a simple mean: it is the only single rate that, compounded over the period, reproduces the true ending value. It makes very different growth paths directly comparable.

Why averaging misleads
Path	Simple average	CAGR (true)
+50%, −50%	0%	−13.4%
+10%, +10%	10%	10%
+100%, 0%	50%	41.4%

What CAGR does not tell you

CAGR is powerful but deliberately hides detail. Because it smooths growth into one rate, it says nothing about the journey: two investments with the same CAGR can have wildly different volatility, and a smooth 12% is far less risky than a 12% that swung from +60% to −40% along the way. CAGR also assumes a single lump sum with no deposits or withdrawals in between; for regular contributions you need a different measure such as money-weighted return. Use CAGR to compare end-to-end growth cleanly, but pair it with a look at volatility and cash flows before drawing conclusions about risk.

Worked examples

Growth

Inputs: 10,000 → 18,000 · 5y

Result: ≈ 12.46% CAGR

Double

Inputs: 100 → 200 · 1y

Result: 100% CAGR

Decline

Inputs: 1,000 → 500 · 2y

Result: ≈ −29.3% CAGR

Glossary

CAGR: The constant annual rate that grows a starting value to an ending value over a period.
Compounding: Earning growth on prior growth, so gains build on themselves over time.
Growth multiple: The ending value divided by the beginning value, e.g. 1.8×.
Total growth: The overall percentage change from start to end, before annualizing.

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CAGR Calculator

Value at the CAGR each year

How to use CAGR Calculator

CAGR versus average return

What CAGR does not tell you

Worked examples

Glossary

Related reading

Frequently Asked Questions

Why use CAGR Calculator?

Common use cases

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