CAGR Calculator

Calculate the Compound Annual Growth Rate of your investment

Last reviewed: July 2026How we build & verifyEstimate only. Verify important decisions with a qualified professional

Beginning Value ($)

Ending Value ($)

Number of Years

yrs

How it works

Compound Annual Growth Rate converts a total change over several years into the single constant annual rate that would produce the same end result. It smooths out volatile year-to-year returns into one comparable figure.

Formula

CAGR = (Ending Value / Beginning Value)^(1/n) − 1

Variables

Ending Valuevalue at the end of the period
Beginning Valuevalue at the start of the period
nnumber of years between the two values

Worked example

Inputs: An investment grows from $10,000 to $25,000 over 7 years

Ratio: 25000 / 10000 = 2.5
Take the 7th root: 2.5^(1/7) ≈ 1.13985
Subtract 1: 0.13985

Result: CAGR ≈ 13.99% per year

Notes

CAGR describes only the two endpoints. A fund that fell 50% then doubled shows 0% CAGR while hiding severe drawdown risk.
It assumes no deposits or withdrawals in between. For a portfolio with cash flows, use money-weighted return (IRR) instead.
CAGR is the geometric mean of annual returns, and it is always less than or equal to the arithmetic average. Averaging +50% and −50% gives 0%, but the actual CAGR is −13.4%.
Count years as the gap between dates, not the number of data points. Five year-end figures span four years of growth, not five.

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Frequently Asked Questions

Compound Annual Growth Rate: the smoothed annual rate at which an investment would have grown to its final value from its initial value, if it grew at the same rate every year.

CAGR = (Final Value / Initial Value)^(1/years) - 1. An investment growing from $10,000 to $16,000 over 5 years has CAGR = (16000/10000)^(1/5) - 1 ≈ 9.86%.

CAGR smooths over volatility. A highly volatile investment (for example, -30% then +50%) has a different risk profile than a steady one, even with the same CAGR. Pair CAGR with standard deviation or Sharpe ratio for a complete picture.

How it works

Formula

CAGR = (Ending Value / Beginning Value)^(1/n) − 1

Variables

Ending Valuevalue at the end of the period
Beginning Valuevalue at the start of the period
nnumber of years between the two values

Worked example

Inputs: An investment grows from $10,000 to $25,000 over 7 years

Ratio: 25000 / 10000 = 2.5
Take the 7th root: 2.5^(1/7) ≈ 1.13985
Subtract 1: 0.13985

Result: CAGR ≈ 13.99% per year

Notes

CAGR describes only the two endpoints. A fund that fell 50% then doubled shows 0% CAGR while hiding severe drawdown risk.
It assumes no deposits or withdrawals in between. For a portfolio with cash flows, use money-weighted return (IRR) instead.
CAGR is the geometric mean of annual returns, and it is always less than or equal to the arithmetic average. Averaging +50% and −50% gives 0%, but the actual CAGR is −13.4%.
Count years as the gap between dates, not the number of data points. Five year-end figures span four years of growth, not five.

CAGR Calculator

How it works

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CAGR Calculator

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