CAGR Calculator

Name: CAGR Calculator: Compound Annual Growth Rate (Free)
Author: InvestinGoal

The CAGR calculator works out the compound annual growth rate, the single steady yearly rate that took an investment from its starting value to its ending value. You enter a starting value, an ending value and a number of years, or solve in reverse from a rate. It returns the CAGR, the total return and the growth multiple, so you can compare investments before committing capital.

Enter a starting value, an ending value and the years between them to get the CAGR.

Starting value

Ending value

Number of years

CAGR

14.87%

Total return

100.00%

Growth multiple

2.00×

14.87% a year, compounded: at or above the long-run equity average.

Show the math

CAGR 14.87% = (€20,000 ÷ €10,000)^(1 ÷ 5) − 1

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These results are estimates for educational purposes only and are not financial, investment or tax advice.

What is a CAGR calculator?

A CAGR calculator is a tool that computes the compound annual growth rate (CAGR), the single steady yearly rate that would take an investment from its starting value to its ending value over a set number of years. Real returns are rarely smooth: an investment might rise 20% one year and fall 8% the next. CAGR replaces that uneven path with one figure, as if the investment had grown by the same percentage every single year, which is what makes it a fair way to compare investments held over different lengths of time. The calculator derives the CAGR from three inputs, a starting value, an ending value and a number of years, and expresses the same growth two more ways: as a total return and as a growth multiple.

Why is the CAGR calculator important for investors?

The CAGR calculator is important for investors because it turns a raw gain into an annualized rate, the single number you can compare across investments before you commit or reallocate capital. A total return says nothing about time: a 100% gain is impressive over 2 years and mediocre over 20, and only the annual rate tells them apart. Annualizing a return this way is a basic habit of investing, because it stops a large headline gain from disguising a slow one, and lets two holdings kept for different periods sit side by side on the same per-year basis.

Investors reach for the calculator at the point of decision, while there is still a choice to make. You use it to compare two funds held for different spans, to check whether a past return actually beat a fair benchmark, or to state a portfolio's growth on a per-year basis before choosing where to allocate next. Running the CAGR before you act is the point: it keeps the decision anchored to the annual rate rather than to the headline total.

How do you use the CAGR calculator?

To use the CAGR calculator, enter a starting value, an ending value and the number of years, and the tool returns the CAGR along with the total return and the growth multiple.

The steps to use the CAGR calculator are listed below:

Enter your starting value. This is what the investment was worth at the beginning of the period, and it is the base the growth is measured from.
Enter your ending value. This is what the same investment is worth at the end, and the ratio between it and the starting value drives the whole calculation.
Set the number of years. This is the length of the period the growth is spread across, which is what converts the total gain into a per-year rate.
Switch mode for a reverse or annualized figure. Select Annualized to turn a total return % and a number of years into the same rate, or Solve to enter a starting value, a CAGR and a horizon and read off the ending value.

The preset chips place your result next to a benchmark, Compare vs S&P (~10%), bonds (~4%) or inflation (~3%), and the Advanced panel changes the display currency. Press Calculate to update the result.

What formula does the CAGR calculator use?

The formula the CAGR calculator uses is the ending value divided by the starting value, raised to the power of one divided by the number of years, minus one.

CAGR = {(\frac{Ending value}{Starting value})}^{1 \div years} - 1

In this formula, the starting value is what the investment was worth at the outset, the ending value is what it is worth at the end, and years is the length of the period; the result is multiplied by 100 to read as a percentage. The exponent, one divided by years, takes the n-th root of the growth ratio, which undoes the compounding to reveal the single annual rate. Solve mode rearranges the same relationship into Ending value = Starting value × (1 + CAGR)^years to project an end value from a rate.

Plugging in the defaults, (€20,000 ÷ €10,000)^(1 ÷ 5) − 1 = 14.87%.

Because it uses only a starting and an ending value, the formula ignores everything that happened in between, so it describes a smoothed rate rather than the real path.

What is an example of a CAGR calculation?

An example of a CAGR calculation is an investment that grows from €10,000 to €20,000 over 5 years, which works out to a CAGR of 14.87%, worked out as follows:

Growth ratio = €20,000 ÷ €10,000 = 2.00.
Annual rate = 2^(1 ÷ 5) − 1 = 1.148698 − 1 = 14.87%.
Total return = (2 − 1) × 100 = 100%, and the growth multiple is 2.00×.

So doubling in 5 years is a 14.87% annual rate, not 20%, which is what dividing the 100% total return by 5 would wrongly suggest. Run the same relationship in reverse, €10,000 at a 7% CAGR for 10 years, and the ending value resolves to €19,671.51.

How do you read the CAGR calculator's result?

You read the CAGR calculator's result by taking the headline percentage as the steady yearly rate the investment earned, then judging it against a benchmark before you decide whether the return justified the risk. The main output is the CAGR, and two support cards frame it: the total return is the whole gain over the period, and the growth multiple is the end value as a multiple of the start. The sign matters first, a negative CAGR is a compound loss, and after that the size is read against what comparable assets have historically returned.

CAGR result	What it signals
Below 0%	A compound loss: the capital shrank over the period
0% to 7%	Below the long-run stock market average of roughly 7% a year after inflation (about 10% before)
7% or above	At or above the long-run equity average

As reference points, broad stock markets such as the S&P 500 have historically returned around 10% a year before inflation and near 7% after, government bonds considerably less at roughly 4%, and inflation has run near 3%. These thresholds are a guide, not a verdict: a good CAGR depends on the asset, the risk taken and the horizon, so a 6% rate can be strong for bonds and weak for a concentrated stock bet. The figure to act on is whether the rate beat a fair benchmark, or whether a low-cost index fund would have earned more for less risk, before you decide to keep the capital where it is.

In what markets can you use the CAGR calculator?

You can use the CAGR calculator in any market where an investment has a clear starting value and ending value, most commonly stocks, funds and crypto.

The markets the CAGR calculator applies to are listed below:

Stocks: annualize a single share's return over periods of different lengths so two holdings can be compared fairly, the core job of measuring stock investing performance.
ETFs and index funds: the most common use is annualizing an index or ETF investing return to line it up against other funds, and it is the source of the S&P (~10%) benchmark in the presets.
Crypto: normalize a very volatile performance into one comparable annual rate, remembering that in crypto investing the CAGR hides the volatility of the path, which is where the real risk sits.

What are the limits of the CAGR calculator?

The limits of the CAGR calculator are that it returns a descriptive estimate of the past, not a forecast, and it depends entirely on the two values you enter and the number of years. Because it reads only the starting and ending values, a start or end point near a market high or low distorts the rate, and it says nothing about the volatility of the ride, so two investments with an identical CAGR can have felt completely different to hold. One might have climbed steadily while the other crashed and recovered, and the single rate cannot tell them apart.

The CAGR also excludes taxes, trading costs and inflation, so the real, after-cost return is lower than the nominal figure shown, and a rate that looks healthy before inflation can be thin once rising prices are subtracted. What the tool returns is a nominal, price-based estimate to inform a decision, not personalised investment advice, and it is only as representative as the two dates you measure between.

How does the CAGR calculator handle regular contributions and dollar-cost averaging?

The CAGR calculator does not handle regular contributions or dollar-cost averaging: it reads only a single starting value and a single ending value, so any money added or withdrawn along the way distorts the rate it returns. Adding a fixed amount on a schedule is the essence of dollar-cost averaging, where each contribution buys in at a different price, and a plain start-to-end CAGR would credit those later deposits with growth they never earned, overstating the true return.

To measure the return on a stream of contributions, you need a money-weighted return, an internal rate of return (IRR) that accounts for the timing and size of every cash flow. The DCA and investment calculators are built for exactly that pattern of periodic deposits, whereas the CAGR calculator is the right tool only when a lump sum sits untouched from the start date to the end date.

What is the difference between a CAGR calculation and an average annual return calculation?

The difference between a CAGR calculation and an average annual return calculation is that a CAGR calculation compounds the actual start-to-end growth into one yearly rate, while an average annual return calculation simply averages each year's return and ignores compounding, which overstates the result whenever returns are volatile. Take an investment that gains 50% one year and loses 50% the next: the simple average is 0%, but €100 becomes €150 and then €75, so you are actually down 25%, a CAGR of −13.40% a year.

Attribute	CAGR calculation	Average annual return calculation
Method	Compounds the actual start-to-end growth	Averages each year's return
Effect of volatility	Reflected accurately	Overstated by it
The 50% up, 50% down case	−13.40% per year	0%
Where it is used	Fund fact sheets, fair comparisons	Quick but misleading summaries

The bigger the swings, the wider the gap between the two figures, and the simple average always flatters a volatile investment. This is why fund fact sheets quote annualized, CAGR-style returns rather than the arithmetic average of yearly figures: the CAGR reflects what the money actually did.

Which calculators are related to the CAGR calculator?

The calculators related to the CAGR calculator cover the wider job of projecting, compounding and adjusting an annual growth rate.

The calculators related to the CAGR calculator are listed below:

Investment calculator: projects an investment forward from a rate and contributions, a richer version of the growth the CAGR calculator summarizes in one number.
FIRE calculator: applies compound growth toward financial independence, showing how many years a given annual rate needs.
Compound interest calculator: models the compounding mathematics that sits behind every CAGR figure.
Future value calculator: finds what a sum becomes at a given annual rate, the forward view of the same relationship the CAGR reverses.
DCA calculator: handles the periodic contributions the CAGR calculator cannot capture.
Inflation calculator: converts a nominal rate into a real one, making the CAGR's inflation limit actionable.
Percentage gain calculator: measures the total percentage change, the total return the CAGR spreads across the years.

FAQ

What is CAGR (compound annual growth rate)?

CAGR is the single steady annual rate that would take an investment from its starting value to its ending value over a set number of years, accounting for compounding. It smooths a bumpy real return into one comparable figure, the fair way to say "this grew X% a year" and to compare investments held for different lengths of time.

What is the CAGR formula?

The CAGR formula is (Ending value ÷ Starting value)^(1 ÷ years) − 1, then multiplied by 100 for a percentage. The 1 ÷ years exponent takes the n-th root of the growth ratio, undoing the compounding to reveal the annual rate. For example, €10,000 growing to €20,000 in 5 years is a CAGR of 14.87%.

What is the difference between CAGR and average annual return?

The average annual return simply averages each year's return and ignores compounding, so volatility distorts it. An investment up 50% then down 50% has a 0% simple average but is actually down 25%, a CAGR of −13.40% a year. CAGR reflects what your money truly did, while the simple average flatters volatile investments.

Is CAGR the same as annualized return?

Yes. Annualized return and CAGR are two names for the same thing: the compound growth rate per year. This calculator's Annualized mode simply lets you enter a total return and a number of years instead of a starting and ending value, and it returns the same annual figure.

What is a good CAGR for investments?

It depends on the asset and the risk, but useful reference points help: broad stock markets have historically delivered roughly 10% a year before inflation and around 7% after, bonds considerably less, and inflation near 3%. A CAGR that beats inflation with reasonable risk is doing its job; one below what a low-cost index fund would have earned deserves scrutiny.

How is CAGR different from total return?

Total return (the same idea as percentage gain) is the whole change from start to end, ignoring how long it took. CAGR spreads that change across the years to give a per-year rate. A +100% total return is the same whether it took 2 years or 20, but its CAGR is very different, which is why CAGR is the right measure when time spans differ.

This tool is for education, not financial advice. CAGR describes past growth and does not predict future returns, and it excludes taxes, costs and inflation, so your real return will differ. Investing carries the risk of losing money.