Calculator
CAGR Calculator
What it calculates
Compound annual growth rate (CAGR) is the smoothed annual rate that takes a starting value to an ending value over a number of years. It's the standard way to compare the performance of investments over different time periods on an apples-to-apples basis.
How this cagr calculator works
CAGR converts a total change between two values into one compounded annual rate, making investments held for different lengths of time easier to compare.
Formula
CAGR = (Ending value ÷ Starting value)1 ÷ years − 1
CAGR hides volatility and the path an investment took. Use it alongside drawdowns, fees, and cash-flow information.
Primary specifications
Before you use the result
Assumptions
- • The starting value, ending value, and holding period are accurate.
- • The result is a smoothed annual rate, not the return earned in any one year.
- • Cash flows added or removed during the period are not modeled.
Quick start
- 1. Enter the value at the start of the period.
- 2. Enter the value at the end of the same period.
- 3. Use the exact number of years between the two values.
Inputs and units
| Input | Unit | Default |
|---|---|---|
| Starting value | US dollars | $10,000 |
| Ending value | US dollars | $25,000 |
| Years | years (fractions allowed) | 7 |
Worked example (hypothetical)
CAGR Calculator: worked example
Hypothetical example using the calculator's default inputs. The numbers are illustrative, not a forecast.
| Starting value | $10,000 |
|---|---|
| Ending value | $25,000 |
| Years | 7 |
| CAGR | 13.99% |
|---|---|
| Total return | 150.00% |
| Multiple | 2.50× |
A 150% total gain over seven years is equivalent to about 13.99% compounded each year.
How to interpret the result
CAGR is a smoothed rate that connects two points. Two investments with the same CAGR can have very different drawdowns along the way, and deposits or withdrawals during the period make the figure misleading.
Frequently asked questions
What is CAGR?
CAGR is the constant annual rate at which an investment would have grown to reach its final value, assuming profits were reinvested each year. It's calculated as (End / Start)^(1/years) − 1.
How is CAGR different from average return?
A simple average ignores compounding and can overstate performance. CAGR reflects the actual compounded growth and is a more honest measure of long-term returns.
Does CAGR show investment risk?
No. CAGR smooths the entire path into one rate and does not reveal volatility, drawdowns, or the timing of returns.
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Apply it to research
The math is easy. The macro is hard.
CAGR Calculator shows the arithmetic. Members get the monthly call that decides which inputs matter, plus written breakpoints when the facts move. $39/month or $249/year.
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