CAGR Calculator

Finance

Calculate the compound annual growth rate (CAGR) of an investment — the smoothed yearly rate that takes a starting value to an ending value over a number of years. Enter the beginning and ending values and the time period.

Formula

CAGR = (Ending Value ÷ Beginning Value)^(1/Years) − 1
  • CAGR is the constant yearly growth rate that would take the beginning value to the ending value.
  • CAGR = (ending ÷ beginning)^(1 ÷ years) − 1, shown as a percentage.
  • It smooths out volatility, so it doesn't reflect the ups and downs along the way.
  • Use it to compare investments held over different time periods on an equal footing.
  • CAGR ignores additional contributions or withdrawals — it assumes a single lump sum.

50,000 grows to 90,000 in 5 years

Inputs
  • Beginning Value: 50000
  • Ending Value: 90000
  • Years: 5

(90,000 ÷ 50,000)^(1/5) − 1 ≈ 0.125, so the investment grew at about 12.5% per year.

Frequently asked questions

What is CAGR?
Compound annual growth rate is the smoothed annual rate at which an investment grows from its start value to its end value.
How is CAGR different from average return?
A simple average ignores compounding; CAGR accounts for it, giving a truer picture of growth over time.
What's a good CAGR?
It depends on the asset and risk. Historically, broad stock markets have returned roughly 7–10% a year before inflation.
Does CAGR show volatility?
No. It's a single smoothed figure and doesn't reveal how bumpy the journey was between the two dates.
Can I use CAGR for any metric?
Yes — revenue, users, or any value that grows over time. Just enter the start value, end value, and number of years.