CAGR Calculator

CAGR (Compound Annual Growth Rate) is the constant annual rate that would grow the initial value to the ending value over the given number of years. Formula: CAGR = (Ending Value ÷ Beginning Value)^(1/years) − 1. It is useful because it lets you compare performance across different time lengths and assets on a single, annualized basis—e.g., a 5-year and a 10-year investment can both be expressed as a yearly growth rate. It does not show volatility or interim returns.

CAGR is the single compounded annual rate that turns the starting value into the ending value over the period; it fully reflects compounding. The average annual return is the simple average of each year’s return (e.g., +10%, −5%, +8% → average 4.33%). That average ignores compounding, so it can be misleading: two investments with the same average return can have different CAGRs and different final values. For comparing end results, CAGR is the right measure.

Yes. If the ending value is lower than the beginning value, the CAGR is negative (e.g., $10,000 shrinking to $8,000 over 3 years gives a negative CAGR). That means the investment lost value on average each year. Negative CAGR is valid and useful for comparing losses or underperformance across different periods or assets.

CAGR assumes a smooth growth path and does not show volatility: two investments can have the same CAGR but very different year-to-year swings. It also ignores any cash flows (deposits or withdrawals) between the start and end dates, so it is best used for a single lump sum held for the full period. For portfolios with regular contributions or withdrawals, use other metrics (e.g., IRR or time-weighted return) in addition to or instead of CAGR.

Use CAGR to compare different investments or assets over the same period (e.g., stock A vs. stock B over 5 years), to compare your portfolio to a benchmark (e.g., S&P 500), or to summarize historical performance in one number. Do not rely on it alone: two assets with the same CAGR can have very different risk (volatility, drawdowns). For forward-looking projections, past CAGR does not guarantee future returns; use it as one input alongside risk and your goals.

CAGR = (ending value ÷ beginning value)^(1 ÷ years) − 1, then × 100. Total growth = (ending value − beginning value) ÷ beginning value, then × 100. Growth amount = ending value − beginning value. No fees, taxes, or cash flows between the two values are included. Source: SEC Investor.gov CAGR glossary: https://www.investor.gov/introduction-investing/investing-basics/glossary/compound-annual-growth-rate-cagr.