📈 CAGR Calculator
By ToolNimba Finance Team · Reviewed by ToolNimba Editorial Review, personal finance content · Updated 2026-06-19
This calculator gives an estimate for information only and is not financial advice. CAGR smooths returns into a single yearly rate and hides the ups and downs along the way, so it does not reflect risk, volatility, fees, taxes, or inflation. Past growth never guarantees future results. Confirm any figure against your own statements and speak to a qualified adviser before making investment decisions.
Enter the starting value, the ending value, and how many years it took to see the compound annual growth rate.
CAGR (Compound Annual Growth Rate) is the steady yearly rate that would turn a starting amount into an ending amount over a set number of years, as if it grew by the same percentage every year. It is the most common way to express the long-run return of an investment, a fund, or any figure that grows over time. Enter the beginning value, the ending value, and the number of years, and this calculator returns the CAGR and the total growth straight away.
What is the CAGR Calculator?
CAGR answers a simple question: if your money had grown by the exact same percentage every single year, what would that percentage be? Real investments rarely move in a smooth line, they jump up one year and fall the next, so comparing a noisy series of yearly returns is hard. CAGR collapses all of that into one representative rate. The formula is CAGR = (ending value ÷ beginning value) raised to the power of (1 ÷ years), minus 1, expressed as a percent. It is a geometric mean of growth, which is why it accounts for compounding rather than just averaging the yearly percentages.
A geometric rate is not the same as a simple average of annual returns, and the difference matters. Suppose an investment gains 50% one year and loses 50% the next. The simple average is 0%, which suggests you broke even, but you did not: 100 grows to 150, then falls to 75, a real loss of 25%. CAGR captures that true result because it works from the start and end values, not from the individual yearly numbers. Whenever returns vary, the CAGR will be lower than the simple average, and the gap widens as the swings get larger.
CAGR has clear limits. Because it only looks at the first and last values, it ignores everything in between, so two investments with very different paths can share an identical CAGR. It says nothing about volatility or risk, and it can be misleading over very short periods or when the start or end point is unusually high or low. Treat it as a clean way to compare long-run growth and to set expectations, not as a forecast or a complete picture of how an investment behaves.
When to use it
- Comparing the long-run return of two investments, funds, or portfolios on an equal yearly basis.
- Measuring how fast a company metric (revenue, users, subscribers) has grown per year over several years.
- Turning a multi-year total return into a single annual figure you can compare against a savings rate or benchmark.
- Setting realistic expectations for future growth based on a smoothed historical rate.
How to use the CAGR Calculator
- Enter the beginning value (the starting amount at the start of the period).
- Enter the ending value (what it grew to at the end of the period).
- Enter the number of years between the two values.
- Read off the CAGR (per year) and the total growth over the whole period.
Formula & method
Worked examples
An investment grows from $10,000 to $20,000 over 5 years.
- Ratio = ending ÷ beginning = 20,000 ÷ 10,000 = 2
- Exponent = 1 ÷ years = 1 ÷ 5 = 0.2
- 2^0.2 = 1.148698
- CAGR = 1.148698 − 1 = 0.148698 = 14.87%
- Total growth = (2 − 1) × 100 = 100%
Result: CAGR ≈ 14.87% per year · Total growth = 100%
Company revenue rises from $5,000 to $8,000 over 3 years.
- Ratio = 8,000 ÷ 5,000 = 1.6
- Exponent = 1 ÷ 3 = 0.3333
- 1.6^0.3333 = 1.169607
- CAGR = 1.169607 − 1 = 0.169607 = 16.96%
- Total growth = (1.6 − 1) × 100 = 60%
Result: CAGR ≈ 16.96% per year · Total growth = 60%
CAGR for a value that doubles (ending = 2 × beginning) over different periods
| Years | Total growth | CAGR per year |
|---|---|---|
| 2 years | 100% | 41.42% |
| 3 years | 100% | 25.99% |
| 5 years | 100% | 14.87% |
| 7 years | 100% | 10.41% |
| 10 years | 100% | 7.18% |
Ending value after 10 years at a given CAGR, starting from $10,000
| CAGR per year | Ending value | Total growth |
|---|---|---|
| 5% | $16,289 | 62.89% |
| 8% | $21,589 | 115.89% |
| 10% | $25,937 | 159.37% |
| 12% | $31,058 | 210.58% |
| 15% | $40,456 | 304.56% |
Common mistakes to avoid
- Confusing CAGR with the simple average of yearly returns. Averaging the yearly percentages overstates the real return whenever they vary. A 50% gain then a 50% loss averages to 0% but actually loses 25%. CAGR uses the start and end values, so it reflects the true compounded result.
- Reading CAGR as a steady, risk-free yearly gain. CAGR is a smoothed figure. The investment almost certainly did not return that exact rate in any single year. It says nothing about volatility, drawdowns, or the path taken between the two endpoints.
- Using an off period or unusual endpoints. Because only the first and last values matter, starting at a market low or ending at a peak can flatter the CAGR. A very short period exaggerates this effect, so prefer longer, representative windows.
- Mismatching the number of years. Count the years between the two values, not the number of data points. Five year-end figures span four years of growth, not five. Getting the exponent wrong skews the result.
Glossary
- CAGR
- Compound Annual Growth Rate: the constant yearly rate that grows the beginning value into the ending value over the period.
- Beginning value
- The starting amount at the start of the measurement period.
- Ending value
- The amount the investment or metric grew to at the end of the period.
- Total growth
- The overall percentage change from start to end, before annualizing it into a yearly rate.
- Geometric mean
- A type of average that multiplies values and takes a root, used for rates that compound, as CAGR does.
- Annualized return
- A multi-year return expressed as a single equivalent rate per year. CAGR is one common annualized measure.
Frequently asked questions
What is CAGR?
CAGR stands for Compound Annual Growth Rate. It is the single steady yearly rate that would turn a beginning value into an ending value over a number of years, assuming the growth compounds each year. It is widely used to summarize the long-run return of an investment or the growth of a business metric.
How is CAGR calculated?
CAGR = (ending value ÷ beginning value) raised to the power of (1 ÷ years), minus 1, then multiplied by 100 to show a percent. For example, $10,000 growing to $20,000 over 5 years gives (2)^(1/5) − 1 = 14.87% per year.
How is CAGR different from average annual return?
A simple average just adds the yearly returns and divides by the number of years, which ignores compounding and overstates the result when returns vary. CAGR is a geometric rate based on the start and end values, so it reflects what actually happened to your money. CAGR is always less than or equal to the simple average.
Can CAGR be negative?
Yes. If the ending value is below the beginning value, the CAGR is negative, showing the equivalent steady yearly rate of decline. For example, a fall from $10,000 to $8,100 over 2 years is a CAGR of about −10% per year.
What is a good CAGR?
It depends on the context and the risk. Broad stock market indexes have historically delivered roughly 7% to 10% per year over long periods before inflation. A higher CAGR usually comes with more risk, and a short or cherry-picked period can flatter the figure, so compare like with like.
What are the limitations of CAGR?
CAGR only uses the first and last values, so it ignores everything in between and hides volatility, drawdowns, and the actual path. Two very different investments can share the same CAGR. It also does not account for fees, taxes, or inflation, and it is not a forecast of future returns.
Sources
- Compound Annual Growth Rate (CAGR) , Investopedia
- Calculating Investment Returns , U.S. Securities and Exchange Commission (Investor.gov)