CAGR calculator: compound annual growth rate
Turn a start value, an end value and a time span into the yearly growth rate that would have produced it, and compare two investments fairly.
What CAGR is
The compound annual growth rate is the single yearly rate that takes a start value to an end value over a period, as if growth had been steady. An investment that went from 10,000 to 25,000 in eight years grew 150% in total, but its CAGR is 12.1% a year: 10,000 × 1.121^8 ≈ 25,000. CAGR is the standard way to compare investments held for different lengths of time; the Research Terminal's "return a year" is exactly this figure.
The formula
CAGR = (End ÷ Start)^(1 ÷ years) − 1. For periods given in dates, years = days ÷ 365.25. A negative result means the investment lost value on average each year.
What CAGR hides
CAGR says nothing about the ride. Two investments can share a CAGR of 10% while one fell 50% along the way and the other never fell more than 10%. Always read CAGR together with the worst fall from a high (drawdown) and the volatility: the drawdown recovery calculator shows why a 50% fall needs a 100% gain to recover, and the Sharpe ratio guide explains return per unit of risk.
Frequently asked questions
How do I calculate CAGR?
CAGR = (ending value ÷ beginning value)^(1 ÷ number of years) − 1. Example: 10,000 growing to 18,000 in 6 years gives (1.8)^(1/6) − 1 = 10.3% a year.
What is the difference between CAGR and average return?
The arithmetic average of yearly returns overstates growth when returns vary. +50% then −50% averages 0%, but the money is down 25%, a CAGR of about −13.4% a year. CAGR is the geometric average and matches what actually happened to the money.
What is a good CAGR for an investment?
The S&P 500 has returned about 10% a year with dividends since 1926, about 7% after inflation. Bonds about 5%, cash about 3.5%. A CAGR above the index over 10+ years is rare; what matters just as much is how deep the falls were on the way.
Can I use CAGR for less than a year?
You can, but annualising a short period exaggerates it: a 10% gain in three months becomes a CAGR of 46%. For periods under a year, quote the total return instead.
From assumptions to real numbers, free
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Go deeper: in-depth guides
S&P 500 returns with dividends: 10.7% a year since 1993, 15.5% over the last 10 years, every calendar year since 1994, best and worst periods, VOO vs…
Max drawdown explained: the risk number that matters mostWhat max drawdown means, how to calculate it, the S&P 500's biggest drawdowns and recovery times, and why it is a better measure of risk than volatil…
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Illustration only — not investment advice and not a forecast. Real returns vary from year to year and can be negative. Disclaimer.