CAGR Calculator
Calculate the Compound Annual Growth Rate of an investment over time.
What Is CAGR?
CAGR (Compound Annual Growth Rate) represents the smoothed annual rate at which an investment grows from its beginning value to its ending value over a given period. It eliminates the volatility of year-to-year returns to show a single consistent growth rate.
The Formula
CAGR = (End Value / Begin Value)1/n − 1
Where n = number of years.
Example
| Begin Value | End Value | Years | CAGR | Total Return |
|---|---|---|---|---|
| $10,000 | $25,000 | 5 | 20.1% | 150% |
| $50,000 | $80,000 | 10 | 4.8% | 60% |
| $1,000 | $10,000 | 20 | 12.2% | 900% |
CAGR is the standard metric for comparing investment performance across different time periods and asset classes. It answers: "What steady rate would have produced this result?"
Frequently Asked Questions
How is CAGR different from average annual return?
Average annual return is the arithmetic mean of yearly returns. CAGR is the geometric mean, accounting for compounding. CAGR is more accurate because it reflects the actual end result. An investment returning +50% then −50% has a 0% average but −25% CAGR.
What is a good CAGR?
The S&P 500's long-term CAGR is about 10% (nominal). Real estate averages 3–5%. A CAGR consistently above the market benchmark indicates strong performance.
Does CAGR work for declining investments?
Yes. If the end value is less than the begin value, the CAGR will be negative. For example, $10,000 shrinking to $7,000 over 3 years has a CAGR of about −11.2%.