CAGR Calculator

Compound annual growth rate (CAGR) is the steady yearly rate that would grow a starting balance to an ending balance over a given period, assuming profits reinvest each year. The formula is CAGR = (ending value ÷ beginning value)^(1 ÷ years) − 1. It answers: "If my investment grew smoothly, what annual rate would get me here?"

CAGR is useful when comparing funds, portfolios, or business lines held for different durations. A 80% total return over 10 years is very different from 80% over 3 years — CAGR makes that clear. It does not show volatility: two investments with the same CAGR can have very different risk profiles. It also assumes no contributions or withdrawals during the period.

Example: $5,000 grows to $9,200 over 5 years. CAGR = ($9,200 ÷ $5,000)^(1/5) − 1 ≈ 13.0% per year. Total return is 84%, but the annualized figure is what you would compare against a benchmark like the S&P 500. Enter values after fees for a net estimate.

CAGR smooths away the path. A portfolio that doubles in year one and halves in year two can end flat — CAGR near 0% even if you experienced wild swings. Risk-averse investors care about drawdowns CAGR hides.

Contributions and withdrawals break the pure CAGR formula. Dollar-cost averaging into a rising market produces a different personal return than CAGR on starting and ending balances alone. Use IRR or money-weighted return for accounts with ongoing deposits.

Fractional years matter for short holds. Six months from $10,000 to $10,800 uses years = 0.5 in the exponent — CAGR ≈ 16.6%, not 8% (which would be simple half-year return annualized incorrectly).

Worked example — decline: $20,000 falls to $14,000 over 4 years. CAGR = ($14,000 ÷ $20,000)^(1/4) − 1 ≈ −8.8% per year. Negative CAGR is the average annual loss rate that explains the shrinkage.

Compare CAGR to benchmarks with similar risk. Large-cap US equity indexes have long-run CAGRs near 7–10% nominal before inflation, but any single window can diverge sharply.

This calculator is educational — not investment advice. It does not forecast future CAGR from past figures.

Public fund fact sheets show CAGR over 1, 3, 5, and 10 years — always match the window when comparing your portfolio to a benchmark.

Survivorship bias affects published CAGR on fund rankings — failed funds disappear from databases, flattering category averages.

Geometric mean return equals CAGR for a single lump sum with no flows — arithmetic average of yearly returns is always higher and should not be substituted.

Logarithmic charts display CAGR as a straight line — useful visual check when comparing volatile assets to their smoothed growth rate.

Benchmark CAGR windows should match your hold period — comparing your 3-year CAGR to a fund’s 10-year CAGR mixes different market regimes.

Private assets (rentals, businesses) rarely have daily marks — use appraised values at consistent intervals when computing CAGR between valuation events.

Volatility drag means two assets with the same arithmetic average return can show different CAGR — rebalancing and path dependency matter beyond endpoint CAGR comparisons.

Rolling 3-year CAGR updated each quarter smooths single-year spikes — useful for dashboards even when headline 10-year CAGR looks more stable than recent experience.

Mutual fund prospectus CAGR often uses specific calendar windows — a fund advertising 10-year CAGR may look different on 5-year or since-inception windows from the same vendor.

Include fees in ending value when comparing fund CAGRs — expense ratios compound silently against headline index returns over long holding periods.

When presenting CAGR to non-finance stakeholders, pair the percentage with the actual starting and ending dollar values so the annualized rate is anchored to real outcomes.

Crypto and venture holdings can show extreme CAGR over short windows — disclose hold period alongside CAGR when sharing performance with stakeholders.

Label charts with the exact start date, end date, and values used so CAGR can be reproduced.