CAGR Calculator

CAGR is the annualized growth rate an investment would need to move from its beginning value to its ending value over a specified period.

CAGR Formula

CAGR = (Ending Value / Beginning Value)^{(1 / n)} − 1 Where: CAGR = Compound Annual Growth Rate n = Number of years Total Return = (Ending Value − Beginning Value) / Beginning Value × 100

CAGR measures the geometric mean annual growth rate of an investment over a specified period. Unlike a simple average of yearly returns, CAGR accounts for the effect of compounding, giving you a single rate that accurately represents the growth trajectory.

How to Use the CAGR Calculator

1

Enter the Beginning Value

This is the initial value of your investment at the start of the period. For example, the purchase price of a stock or the initial deposit amount.

2

Enter the Ending Value

This is the final value of your investment at the end of the period. For example, the current stock price multiplied by shares, or the final account balance.

3

Enter the Number of Years

Enter the total time period in years. You can use decimals for partial years (e.g., 3.5 for three and a half years).

4

Click "Calculate CAGR"

The calculator will instantly show you the compound annual growth rate, total return percentage, and total gain or loss in dollars.

Example Calculation

$10,000 grew to $25,000 in 5 years

Given:

• Beginning Value = $10,000
• Ending Value = $25,000
• Number of Years = 5

Step 1: Divide ending value by beginning value

25,000 / 10,000 = 2.5

Step 2: Raise to the power of 1/n

2.5 ^(1/5) = 2.5 ^0.2 = 1.2011

Step 3: Subtract 1 and convert to percentage

1.2011 − 1 = 0.2011 = 20.11%

Result: CAGR = 20.11%

Total Return = (25,000 − 10,000) / 10,000 × 100 = 150%

Total Gain = $15,000

Understanding the Results

CAGR (Compound Annual Growth Rate)

This is the single annual rate that, if applied consistently each year, would grow your beginning value to the ending value. It smooths out year-to-year volatility and gives you one number to represent the average annual performance. A 20.11% CAGR means your investment grew by an average of 20.11% each year.

Total Return

This is the overall percentage change from start to finish. It does not account for time. A 150% total return over 5 years is impressive, but comparing it to a 50% return over 1 year requires annualizing both — which is exactly what CAGR does.

Total Gain / Loss

This is the absolute dollar amount you made or lost. While useful, it doesn't account for the time invested or the size of the initial investment. Always consider it alongside CAGR for a complete picture.

Important Limitation

CAGR does not reflect actual year-to-year volatility. Your investment may have had years of +50% and years of −20%, but CAGR shows only the smooth average. Always consider the risk and volatility alongside CAGR when evaluating investments.

Key Definitions

CAGR

Compound Annual Growth Rate — the annualized average rate of return that smooths out volatility over a period.

Beginning Value

The initial value of an investment at the start of the measurement period.

Ending Value

The final value of an investment at the end of the measurement period.

Total Return

The overall percentage gain or loss from beginning to end, not annualized.

Compounding

The process where returns generate their own returns, causing exponential growth over time.

Geometric Mean

The average that accounts for compounding, used in CAGR calculation as opposed to arithmetic mean.

Frequently Asked Questions

What is CAGR?

CAGR (Compound Annual Growth Rate) is the annualized average rate of return on an investment over a specified period of time. It represents the rate at which an investment would have grown if it increased at a steady rate every year, ignoring volatility. CAGR is one of the most widely used metrics for comparing the performance of different investments.How is CAGR different from average annual return?

A simple average of annual returns adds up each year's return and divides by the number of years. This does not account for compounding. CAGR uses the geometric mean, which properly accounts for the effect of compounding. For example, if an investment gains 50% one year and loses 50% the next, the simple average is 0%, but the CAGR is approximately −13.4% (because the investment actually lost value). CAGR gives a more accurate picture of actual performance.Can CAGR be negative?

Yes. If the ending value is less than the beginning value, CAGR will be negative. For example, if you invest $10,000 and it drops to $8,000 over 3 years, the CAGR would be approximately −7.19%, indicating an annualized loss.What is a good CAGR for investments?

It depends on the asset class and risk level. Historically, the S&P 500 has delivered about 10% CAGR before inflation (roughly 7% after inflation). A CAGR above 15% sustained over many years is considered exceptional. For fixed deposits and bonds, 4–7% is typical. For high-risk venture investments, 25%+ CAGR might be targeted. Always compare CAGR against appropriate benchmarks.What is the difference between CAGR and total return?

Total return is the overall percentage change from the beginning value to the ending value, regardless of time. CAGR annualizes that return. For example, a 100% total return over 10 years equals a CAGR of about 7.18%, while the same 100% return over 2 years equals a CAGR of about 41.42%. CAGR makes it possible to fairly compare investments held for different time periods.Can I use CAGR for non-investment calculations?

Yes. CAGR can measure growth in any metric over time — revenue growth, population growth, user base growth, GDP growth, and more. Any time you want to express how fast something grew on an annualized basis, CAGR is the right metric to use.How do I calculate CAGR in Excel or Google Sheets?

Use the formula: =(Ending_Value/Beginning_Value)^(1/Years)-1

For example, if the beginning value is in cell A1, ending value in B1, and years in C1:
=(B1/A1)^(1/C1)-1

Format the result as a percentage.