CAGR calculator (compound annual growth rate)

CAGR answers a simple question: at what constant yearly rate would you need to grow to go from a starting value to an ending value? It is the honest measure of performance over several years.

Starting value€10,000Ending value€25,000Years8

Annual growth rate (CAGR)

12.14 %

Total return

150.0 %

Simple average per year

18.75 %

Doubling time at this rate

6.1 y

Constant CAGR pathStraight line

The simple average overstates the real annual growth because it ignores compounding. Compare funds by CAGR, over the same period.

Calculated in your browser, nothing is stored. Education, not investment advice.

How to use it

4 steps

01
Starting valueThe amount invested or the initial level.
02
Ending valueThe amount or level reached.
03
LengthThe number of years in between.
04
Read the CAGRThe equivalent constant yearly rate, to compare across investments.

Formula

CAGR = (ending value / starting value)^{1 / years} - 1

The simple average (total return / years) always overstates this rate.

Worked example

From €10,000 to €25,000 in 8 years

Ratio: 25,000 / 10,000 = 2.5.
Eighth root: 2.5^(1/8) = 1.1214.
CAGR: 12.14% a year.
Simple average: 150% / 8 = 18.75% a year, clearly misleading.

The investment grew 12.1% a year compounded, not 18.75%.

Why not the simple average?

A year at +50% followed by a year at -50% gives a simple average of 0%, yet the capital has lost 25%. CAGR gives -13.4% a year: it says what happened to the portfolio.

Questions and answers

Is CAGR the same as average annual return?

Not the arithmetic average: CAGR is the geometric average, the one that matches the real path of the capital.

Does CAGR account for contributions?

No, it compares two values. With regular contributions you need an internal rate of return (IRR) or a time-weighted return.

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Notitia