CAGR Calculator (Compound Annual Growth Rate)
Compute the compound annual growth rate from beginning and ending values with annualized return, total return, growth multiple, and a constant-rate growth path.
CAGR Calculator — interactive calculator, computed instantly in your browser.
CAGR Explained: Reading Compound Annual Growth the Right Way
Start Value to End Value at a Constant Annual Rate
CAGR — the compound annual growth rate — is the constant annual percentage that would grow a starting value into an ending value over a period of years. Fund reports, pitch decks, and business KPIs quote it because it smooths the bumpiness of real returns: whether the path climbed steadily or swung wildly, CAGR answers one question — what yearly rate gets me from here to there?
1. The CAGR Formula, Step by Step
- Both values must be positive — a zero or negative ending value (total wipeout) has no meaningful annualized rate
- The exponent 1 ÷ years annualizes the total return: 4 years → 0.25, 10 years → 0.10
- Subtracting 1 converts the growth factor (1.127) into a rate (12.7%)
- CAGR is geometric, never arithmetic: averaging +30% and −10% gives +10%, yet the account actually compounds to 0.9 × 1.3 = 1.17 → +17% total → +8.2% CAGR
2. How to Read the Number
A 10% CAGR doubles money in about 7.2 years (Rule of 72: 72 ÷ 10); a 20% CAGR doubles in 3.6 years. Always compare CAGR over comparable horizons: 15% for 3 years turns $10,000 into $15,209, while 12% for 20 years turns the same $10,000 into $96,460. The lower rate wins decisively because time compounds — multiply the rate by the horizon before judging which is better.
3. Where CAGR Misleads
- Path blindness: +100% then −50% ends where it started (0% CAGR) — volatility is invisible in endpoint math
- Endpoint sensitivity: starting the clock at a market peak or trough skews the entire figure
- No cash flows: CAGR assumes one lump sum; SIPs, top-ups, and withdrawals need XIRR (money-weighted) returns instead
- Business use: smooth revenue CAGR across a 3–5 year window so one anomaly year doesn't define the trend
🔗 Investment Growth Cross-References
CAGR strips volatile timing out of a return so two investments compare fairly — start with our 💰 Financial Hub for compounding, SIP, ROI, and inflation tools.
Growth is only half the story: discount tomorrow's value back with present-value and CD yield tools below.
Frequently Asked Questions (CAGR Calculator)
Divide the ending value by the beginning value, raise the result to the power of 1 divided by the number of years, then subtract 1. A $10,000 investment growing to $20,000 over 5 years gives (20,000 ÷ 10,000)^(1/5) − 1 = 14.87% per year, the constant rate that reproduces the endpoint exactly.
Yes. When the ending value sits below the beginning value the ratio is under 1, so the computed rate comes out negative — that is an annualized loss, and it is just as informative as a gain. Showing only positive CAGR hides drawdowns and misleads anyone comparing options.
CAGR is geometric and compounds: each year's return applies to the previous balance. A simple arithmetic average ignores that compounding chain and overstates results whenever returns vary, because equal-sized gains and losses do not cancel out symmetrically in a compounding series.
Total return ignores time: +100% in one year and +100% in ten years look identical as totals but are completely different investments. CAGR annualizes both onto one scale, letting a 3-month trade and a decade-long fund be judged on equal footing.