CAGR calculator
Annualize growth between two values.
- Formula and assumptions shown
- Table and CSV export
- Runs in your browser
How it works
CAGR answers the question: what constant annual rate would turn the beginning value into the ending value over the entered period? It is a smoothed description of growth, not a claim that the path was steady.
CAGR = (ending value ÷ beginning value)^(1 ÷ years) − 1.
Because CAGR does not accept interim deposits or withdrawals, use it for comparable start-and-end values. A cash-flow series needs an IRR or a contribution-aware growth model.
Assumptions
- The beginning value is positive and the ending value is zero or positive; an ending value of zero produces a −100% CAGR.
- The period is entered as a whole number of years.
- There are no interim contributions or withdrawals.
- CAGR does not describe volatility or the sequence of returns.
Worked example
$10,000 to $12,100
If $10,000 becomes $12,100 in two years, CAGR is (12,100/10,000)^(1/2) − 1 = 10%.
Step by step
- Divide the ending value by the beginning value. $12,100 ÷ $10,000 = 1.21, so the value grew by 21% over the whole period.
- Take the root for the number of years. Over 2 years, 1.21^(1 ÷ 2) = 1.10.
- Subtract 1. 1.10 − 1 = 0.10, a CAGR of 10%.
- Check by compounding forward. $10,000 × 1.10 = $11,000 after year 1, and $11,000 × 1.10 = $12,100 after year 2. Total change is $12,100 − $10,000 = $2,100.
How to read your result
CAGR is the single constant yearly rate that turns the beginning value into the ending value over the years entered. Total change is the dollar difference, and the beginning and ending values are repeated beside it. The bar chart compares the two dollar values; the percentage is reported separately.
CAGR smooths the path. It does not show what happened in any single year, how much the value swung, or whether it dipped below the start along the way. Two investments with the same CAGR can have had very different rides.
The formula assumes nothing was added or withdrawn between the two dates. If money went in or out, CAGR on the account balance mixes deposits with growth, and an IRR calculation that includes each cash flow is the better measure. The result is nominal; subtracting inflation gives a rough real rate.
What changes the result most
- Number of years
- The same $2,100 gain spread over 3 years is a CAGR of 6.56%, and over 5 years 3.89%, compared with 10% over 2 years.
- Ending value
- Over 2 years, an ending value of $13,000 instead of $12,100 gives a CAGR of 14.02%. A value that doubles in 5 years, from $10,000 to $20,000, is a CAGR of 14.87%.
Questions
Does CAGR show my actual yearly returns?
No. It replaces a changing path with one equivalent annual rate. Two investments can have the same CAGR and very different volatility.
Can I use a zero or negative value?
The beginning value must be positive; the ending value may be zero or positive. An ending value of zero gives a −100% CAGR. A negative value or a path that crosses zero needs a cash-flow return method.
Should I use CAGR for monthly deposits?
No. Interim deposits change the amount invested over time. Use the compound-growth calculator or an IRR model that includes each cash flow.
How do you calculate CAGR?
CAGR = (ending value ÷ beginning value)^(1 ÷ years) − 1. For $10,000 growing to $12,100 in 2 years: 1.21^(1 ÷ 2) − 1 = 10%. In a spreadsheet the same formula is =(end/start)^(1/years)-1.
How is CAGR different from an average annual return?
An average annual return adds up each year’s return and divides by the number of years; CAGR is the compound rate that links the start and end values. They can differ a lot: a 50% gain followed by a 50% loss averages 0%, but $10,000 becomes $15,000 and then $7,500, a CAGR of −13.40%.
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Sources
These references explain the concepts behind the calculation. They do not endorse this site. Estimates leave out any cost or condition you did not enter.