What is CAGR?
Compound annual growth rate is the equivalent yearly return that compounds from the start value to the end value over the stated years.
CAGR Calculator
Find the smooth annualized rate that takes a starting balance to an ending balance over a number of years.
Enter start, end, and years
Provide beginning value, ending value, and the holding period in years.
About this calculator
How to use CAGR Calculator, plus the formulas and logic behind the results.
Tool description
CAGR is the constant annual rate of return that would grow an investment from its beginning value to its ending value over a given period, assuming compounding once per year.
How to use
- Enter the starting (beginning) value of the investment.
- Enter the ending value after the holding period.
- Enter how many years the investment was held.
- Select Calculate to view CAGR and total growth.
Formulas & reference
CAGR = (Ending ÷ Starting)^(1 ÷ Years) − 1Total growth = Ending − StartingTotal return % = (Ending ÷ Starting − 1) × 100
CAGR tips
- Useful for comparing investments held different lengths of time
- Does not show path risk or drawdowns
- Negative CAGR means the ending value is below the start
- Fractional years are allowed (e.g. 2.5)
Calculation logic
The ratio of ending to starting value is raised to 1/years, then 1 is subtracted and scaled to a percent. Starting value and years must be positive.
CAGR ignores interim volatility; it is an educational smoothed rate, not a guarantee of future returns.
CAGR Calculator FAQ
Common questions about the calculation and how to interpret the estimate.
How do you calculate CAGR?
Divide ending by starting, raise to 1/years, subtract 1, then multiply by 100 for a percent.
Is CAGR the same as average return?
No. A simple average of yearly returns can differ from CAGR because of compounding and volatility.
Can CAGR be negative?
Yes, if the ending value is less than the starting value.
Does CAGR include dividends?
Only if your ending value already reflects reinvested dividends or distributions.
Why use CAGR?
It lets you compare growth across different time horizons with one annualized rate.