CAGR Calculator (Compound Annual Growth Rate)

Find the single steady annual growth rate that would carry an investment from its beginning value to its ending value over a set number of years, using CAGR = (Ending Value / Beginning Value)^(1/Years) − 1.

Quick Facts

Formula
CAGR = (End ÷ Begin)^(1/n) − 1
n is the number of years between the beginning and ending values.
What it smooths
One steady annual rate
CAGR is the constant yearly rate that would carry the beginning value to the ending value, ignoring the year-to-year path.

Your Results

Calculated
CAGR
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Compound annual growth rate
Total return
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Overall gain or loss over the period
Growth multiple
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Ending value ÷ beginning value
Absolute growth
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Ending value minus beginning value

Ready

Enter beginning value, ending value, and number of years, then press Calculate.

How the CAGR Calculator works

Compound Annual Growth Rate (CAGR) answers one question: what single, steady annual rate would have carried an investment from its beginning value to its ending value over the years in between? Real investments rarely move in a straight line — some years are up, some are down — but CAGR smooths that path into one number so different investments or time periods can be compared on equal footing.

The formula

For a beginning value B, an ending value E, and n years between them, CAGR is:

CAGR = (E / B)1/n − 1

The result is a decimal that is typically shown as a percentage. The calculator also reports the total return over the whole period (E / B − 1), the growth multiple (E / B), and the absolute dollar growth (E − B), since CAGR alone does not convey the size of the underlying investment.

Worked example

An investment worth $10,000 grows to $16,000 over 5 years. The growth multiple is 16,000 / 10,000 = 1.60, so CAGR = 1.601/5 − 1 ≈ 9.86% per year. The total return over the full period is 60%, and the absolute growth is $6,000 — CAGR is the compounding rate that turns $10,000 into $16,000 across exactly 5 years of steady annual growth.

CAGR versus the average of annual returns

CAGR is not the same as averaging each year's percentage return. A portfolio that gains 50% one year and loses 50% the next has an arithmetic average return of 0%, but it actually lost value overall (multiply 1.5 × 0.5 = 0.75, a 25% loss over two years). CAGR captures that compounding effect correctly because it only looks at the beginning and ending values, while a simple average of yearly percentages can overstate performance whenever returns are volatile.

What CAGR does not capture

  • The path in between: two investments with identical beginning and ending values have the same CAGR even if one grew smoothly and the other swung wildly — CAGR is blind to volatility along the way.
  • Additional contributions or withdrawals: the formula assumes a single beginning value and a single ending value, with no deposits or withdrawals in between. Cash flows during the period would need a different measure, such as an internal rate of return (IRR).
  • Fees, taxes, and inflation: unless the beginning and ending values already reflect those costs, the CAGR shown is a nominal, pre-tax, pre-fee figure.

Negative CAGR

If the ending value is lower than the beginning value, CAGR is negative — it represents the steady annual rate of decline rather than growth. If the ending value is zero, CAGR is exactly −100%, since the investment lost its entire starting value over the period.

Frequently Asked Questions

How is CAGR calculated?
CAGR uses the formula CAGR = (Ending Value / Beginning Value)^(1/Years) − 1. It finds the single constant annual growth rate that, if compounded every year for the given number of years, would turn the beginning value into the ending value.
Why does CAGR differ from the simple average of annual returns?
A simple average adds up each year's percentage return and divides by the number of years, which ignores compounding and can overstate results when returns are volatile. CAGR only uses the beginning and ending values, so it correctly reflects the actual compounding path — for example, a 50% gain followed by a 50% loss averages to 0% but is really a 25% loss, which CAGR reports accurately.
What does a negative CAGR mean?
A negative CAGR means the ending value is lower than the beginning value — it is the steady annual rate of decline over the period, not growth. If the ending value is zero, CAGR equals −100%, reflecting a total loss of the starting value.
Does CAGR account for volatility or contributions along the way?
No. CAGR only looks at the beginning and ending values and the number of years between them. It assumes no additional deposits or withdrawals occurred, and it does not reflect how bumpy or smooth the path between those two values was — two investments with very different year-to-year swings can still have identical CAGR.

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