CAGR calculator

Turn a starting value, ending value and time period into a compound annual growth rate — the single yearly number that describes the whole period.

How this calculator works

CAGR answers a simple question: what constant yearly percentage would turn the starting value into the ending value? It is calculated from the total change over the period, not from the individual yearly returns, so it is a summary — not a prediction. Two investments with the same starting and ending values have the same CAGR even if one went up smoothly and the other crashed and recovered.

Because it is a geometric average, CAGR is much fairer than averaging yearly percentage returns. It is the standard way to compare funds, companies and portfolios held for different lengths of time. A negative result simply means the ending value is below the starting value. If the beginning value is zero the ratio is undefined, and if the ending value is zero the CAGR is −100%.

The formula

For beginning value B, ending value E and y years:

Expressed as a percentage, multiply by 100. The total growth multiple is E ÷ B and total growth is (E ÷ B − 1) × 100%. Rearranged, this is exactly the compound interest formula: E = B × (1 + CAGR)^y.

Worked example

Growing from 10,000 to 20,000 over 5 years is a total gain of 100.00% and a multiple of 2.0×. The equivalent compound annual growth rate is 14.87% a year.

Common mistakes

• Averaging annual returns. Taking the arithmetic mean of yearly percentage returns always overstates compound growth when returns vary.
• Using it on volatile short periods. A two-year CAGR from a market bottom to a peak can look spectacular and tells you nothing about the future.
• Ignoring contributions. If you added money during the period, the beginning and ending values do not describe the same investment. Use a time-weighted return for portfolios with deposits.