CAGR Calculator
Calculate the Compound Annual Growth Rate (CAGR) over a period.
Input Data
Results
At a glance:The Compound Annual Growth Rate (CAGR) smooths the total growth of an investment or metric over a period into a single annual compounded rate, accounting for compounding. It converts investments of different horizons and starting points into a uniform annualised basis, making it one of the most common metrics for comparing long-term returns.
Formula
CAGR = (ending value ÷ beginning value)^(1 ÷ years) − 1.
Total growth = (ending value − beginning value) ÷ beginning value × 100%.
$$CAGR$CAGR=\\left(\\dfrac{V_{end}}{V_{begin}}\\right)^{\\frac{1}{t}}-1$$$$$$\\dfrac{V_{end}-V_{begin}}{V_{begin}}\\times100\\%$$$$$$\\left(\\dfrac{19{,}000}{10{,}000}\\right)^{\\frac{1}{5}}-1\\approx13.70\\%$$$How to Use
- Enter the beginning value of the investment or metric.
- Enter the ending value after the period.
- Set the number of years to see the CAGR and total growth instantly.
FAQ
How is CAGR different from the average annual growth rate?
CAGR smooths the whole period's growth into a single steady compounded rate, accounting for compounding. A simple arithmetic average (total growth ÷ number of years) ignores compounding and usually overstates the real annualised return.
Why is CAGR useful for comparing different investments?
It converts investments of different horizons and starting points into a uniform annualised compounded rate, so you can directly compare, say, a 3-year holding against a 7-year one.
What are the blind spots or limitations of CAGR?
CAGR is useful but has important blind spots. First and biggest: it looks only at the beginning and ending points and completely ignores the path in between — two investments with the same CAGR can differ wildly (one rising steadily, another crashing then surging); CAGR does not reflect this 'bumpiness' (risk). Second, it is sensitive to the chosen start and end points — beginning at a market low and ending at a high flatters the number. Third, it assumes smooth compounding, whereas actual yearly returns vary; CAGR is only an 'equivalent' average speed, not what any single year actually earned. Fourth, it ignores cash flows in or out — if you add or withdraw capital, use IRR or a time/money-weighted return instead. Use CAGR to gauge the magnitude of long-term return quickly, but pair it with risk metrics for big decisions.
Can CAGR be negative?
Yes. When the ending value is below the beginning value (a loss), CAGR is negative, representing the annualised 'shrink' rate. Note the formula requires both beginning and ending values to be positive; a zero or negative ending value makes CAGR mathematically meaningless, and the number of years must be greater than 0.
How are CAGR, annualised return and real return related — should I look at them together?
CAGR, annualised return and real return are three linked metrics best viewed together. First, CAGR and 'annualised return' are essentially the same thing: both equal (end ÷ begin)^(1/years) − 1, just different names — one common for growth metrics, the other for investment returns. Second, the real rate of return subtracts inflation via the Fisher equation, (1 + nominal) ÷ (1 + inflation) − 1, showing your true gain in purchasing power. A full assessment: (1) use CAGR/annualised return to put total return on a fair annual basis; (2) use the real rate to strip out inflation; (3) optionally deduct fees and tax. Example: HK$100,000 → HK$190,000 over 5 years gives a nominal CAGR ≈ 13.70%, but at 3% inflation the real annualised return ≈ 10.39%. Pair this tool with our Percentage Return, Real Rate of Return and Inflation calculators.
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References
Content review: Calculatorism Finance Team. Results are for reference only; please refer to the relevant authorities for the official figures.