— Investment
CAGR Calculator
Work out the steady annual rate behind a change in value — the single number that turns a start, an end and a time span into an annualized growth rate.
CAGR
24.57%
- Total growth
- 200%
- Absolute change
- $20,000
- Times your money
- 3
- Doubling time (at this CAGR)
- 3 yrs 2 mos
— Year by year
| Year | Opening | Gain | Cumulative gain | Value | Growth to date |
|---|---|---|---|---|---|
| 1 | $10,000 | $2,457.31 | $2,457.31 | $12,457.31 | 24.57% |
| 2 | $12,457.31 | $3,061.15 | $5,518.46 | $15,518.46 | 55.18% |
| 3 | $15,518.46 | $3,813.36 | $9,331.82 | $19,331.82 | 93.32% |
| 4 | $19,331.82 | $4,750.43 | $14,082.25 | $24,082.25 | 140.82% |
| 5 | $24,082.25 | $5,917.75 | $20,000 | $30,000 | 200% |
— How it works
CAGR = (Ending value ÷ Beginning value)^(1 ÷ years) − 1
What CAGR is
CAGR is the single annual rate that, compounded each year, turns the beginning value into the ending value. It answers one question — “if growth had been perfectly steady, how fast did it grow each year?” — and collapses a messy real-world result into one figure you can compare against anything else.
Worked example — $10,000 grows to $30,000 over 5 years: CAGR = (30,000 ÷ 10,000)^(1 ÷ 5) − 1 = 3^0.2 − 1 ≈ 24.6% a year. Growing $10,000 at 24.6% for five years lands back on $30,000.
Why it isn’t the average
Because it compounds, CAGR is not the total gain split evenly across the years. Tripling your money over five years is 200% in total but only about 24.6% a year — each year builds on the last.
It also differs from averaging the yearly returns. Up 50% then down 50% averages to zero, yet leaves you down 25%, because the fall lands on a bigger base. CAGR reflects what actually happened to the money; a simple average does not.
What CAGR leaves out
CAGR uses only the first value, the last value and the time between them — nothing in between. Two investments with the same CAGR can have completely different paths, one calm and one violent, so CAGR says nothing about volatility or risk.
It also ignores money added or withdrawn along the way. If you paid in or took out cash during the period, CAGR mis-states the real performance; a money-weighted return such as IRR or XIRR is the right tool for that.
— Reader questions
How is CAGR different from a simple average return?
A simple average just adds the yearly returns and divides; it ignores compounding and can be badly misleading. CAGR is the geometric rate that actually reproduces the end value from the start value, so it accounts for gains building on gains (and losses on losses).
Can CAGR be negative?
Yes. If the ending value is below the beginning value, the CAGR is negative — the steady annual rate of decline. The calculator handles this; the result simply comes out below zero.
Does CAGR account for money I added or took out?
No. CAGR only looks at the first and last values and the time between them. If you contributed or withdrew along the way, CAGR overstates or understates the true performance — a money-weighted return (IRR/XIRR) is the right tool there.
What is a “good” CAGR?
It depends entirely on the asset and the risk taken. Broad stock markets have delivered very roughly 7–10% a year over the long run before inflation; a CAGR far above that usually came with far more risk, and may not repeat.
Why doesn’t CAGR show how risky the investment was?
Because it only uses the endpoints. Two investments with the same start, end and CAGR can have wildly different paths in between. To judge risk you also need a measure of volatility, such as standard deviation or the Sharpe ratio.