CAGR Calculator
Calculate the Compound Annual Growth Rate (CAGR) — the smoothed annual return of an investment over time. Enter the initial value, final value and the number of years.
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Save ⟶How to use the CAGR Calculator
- 1Enter the initial (starting) value of the investment.
- 2Enter the final value at the end of the period.
- 3Enter the number of years between the two values.
- 4Read the CAGR — the constant annual rate that links the two figures.
Why CAGR beats simple average returns
CAGR answers a simple question: at what steady annual rate would your money have to grow to get from the starting value to the ending value? The formula is (Final / Initial)^(1/years) − 1. Because it compounds, CAGR is a more honest measure of investment performance than a simple average of yearly returns, which can be distorted by volatile up-and-down years.
Use CAGR to compare investments held for different lengths of time on an equal footing. It says nothing about the bumpiness of the ride, though — two investments with the same CAGR can have very different risk.
Frequently Asked Questions
▸What is a good CAGR?
It depends on the asset and risk. Long-run stock market CAGR has historically been around 7–10%. Compare any CAGR against alternatives of similar risk.
▸What's the difference between CAGR and absolute return?
Absolute return is the total percentage gain over the whole period; CAGR converts that into a constant per-year rate, which makes different time periods comparable.