CAGR Calculator
Calculate the Compound Annual Growth Rate to measure annualized investment returns over time.
Result
- Beginning Value
- $0.00
- Ending Value
- $0.00
- Time Period
- 0 years
- Total Return
- 0%
- CAGR
- 0%
Formula & Guide
Formula
%
CAGR Formula
CAGR = (EV/BV)^(1/n) - 1
Compound Annual Growth Rate
Formula Variables
EV
Ending Value
Final value of investment
BV
Beginning Value
Initial value of investment
n
Years
Number of years
Step-by-Step Scenario
Example: Portfolio Growth
Initial
$50,000
Final
$85,000
Period
5 years
1
Calculate Ratio
- Ratio = $85,000 / $50,000 = 1.70
2
Apply Formula
- CAGR = 1.70^(1/5) - 1 = 1.112 - 1 = 0.112
3
Convert to Percentage
Additional Examples
10-Year Investment
Begin: $100,000
End: $259,374
Years: 10
CAGR
10.0%
Fund Performance
Begin: $10,000
End: $8,500
Years: 2
CAGR
-7.8% (loss)
Characteristics of CAGR
Smooths Volatility
CAGR shows consistent growth rate, ignoring year-to-year fluctuations.
Time-Adjusted
Unlike simple ROI, CAGR accounts for investment duration.
Compare Investments
Use CAGR to compare investments with different time periods.
Realistic Expectations
CAGR helps set realistic expectations for future growth.
Important Notes
- CAGR doesn't show volatility—two investments can have same CAGR with very different risk.
- Use CAGR alongside other metrics like standard deviation for complete picture.
- Historical CAGR doesn't guarantee future returns.
- CAGR assumes reinvestment of all returns.
Frequently Asked Questions
Common questions about CAGR.
CAGR (Compound Annual Growth Rate) is the mean annual growth rate of an investment over a specified time period longer than one year. It smooths out volatility to show the consistent rate that would produce the same result.
Average return is the arithmetic mean of yearly returns. CAGR is the geometric mean that accounts for compounding. CAGR is more accurate for multi-year investments because it considers that returns compound.
S&P 500 historically has ~10% CAGR. >15% is excellent, 10-15% is good, 5-10% is moderate. Compare to benchmarks and consider risk. Higher CAGR often means higher risk.
Yes, if your ending value is less than beginning value, CAGR will be negative, indicating an average annual decline in value.