CAGR Calculator
Compound Annual Growth Rate (CAGR) Calculator
Calculate the compound annual growth rate of any investment. CAGR smooths out returns over multiple years to give you a single annualized growth rate, making it easy to compare investments of different durations.
Investment Values
Results
INSTRUCTIONS
How to Use This Calculator
1. Enter Beginning Value
Type the initial value of your investment at the start of the measurement period. This is your cost basis or starting balance.
2. Enter Ending Value
Input the current or final value of your investment. Use the market value at the end of the period you want to measure.
3. Set Time Period
Enter the number of years between the beginning and ending values. Use decimals for partial years, like 3.5 for three and a half years.
4. Read Your CAGR
The calculator displays your CAGR, total return percentage, and absolute dollar return instantly as you type.
EDUCATION
Understanding CAGR
CAGR, or compound annual growth rate, represents the rate at which an investment would have grown if it had grown at a steady rate every year. It smooths out the volatility of year-to-year returns to give you a single, easy-to-understand annual growth number. This makes CAGR one of the most widely used metrics for comparing investment performance.
The formula is: CAGR = (Ending Value / Beginning Value)^(1/Years) - 1. Unlike average annual return, CAGR accounts for the compounding effect. An investment that goes up 100% one year and down 50% the next has an average annual return of 25%, but a CAGR of 0% because you end up exactly where you started.
For example, if you invested $10,000 and it grew to $25,000 over 5 years, your CAGR is approximately 20.11%. This means your investment grew at an equivalent steady rate of 20.11% per year, even though actual yearly returns likely varied. The total return of 150% tells you the overall gain, while CAGR tells you the annualized pace of that growth.
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