CAGR (compound annual growth rate) is the steady yearly rate that would take your starting value to your ending value over the period, as if it grew by the same percentage every year. It smooths out the ups and downs into one comparable annual figure.

How is CAGR calculated?

CAGR = (ending value / beginning value) raised to the power of (1 / number of years), minus 1. For example, growing from 10,000 to 25,000 over 7 years is (25000/10000)^(1/7) - 1, about 14% a year.

Does CAGR account for volatility?

No. CAGR assumes smooth, constant growth, so it hides the year-to-year swings an investment actually experienced. It is a comparison and summary tool, not a measure of risk.

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CAGR Calculator

Q: Why use CAGR instead of total return?

Total return tells you how much you gained overall, but not how fast. CAGR annualises it so you can compare investments held for different lengths of time on an equal footing — a 150% total return over 7 years and over 3 years are very different annual rates.

Updated: August 2026 · A summary measure, not a risk metric.

Enter what an investment was worth at the start and end, and how many years passed, and this calculator gives you the compound annual growth rate — the steady yearly rate that links the two — plus the total return. It works in any currency.

Beginning value

Ending value

Years

yrs

Compound annual growth rate (CAGR)13.99%

Total return150%

Total gain$15,000

CAGR is the steady annual rate linking your start and end values; it ignores the ups and downs along the way. Project future growth →

What CAGR tells you (and what it hides)

CAGR answers a simple question: "if this had grown by the same percentage every year, what would that percentage be?" That makes it the fairest way to compare investments held for different lengths of time — a return of 150% means very different things over 3 years versus 10. What CAGR deliberately hides is the journey: it smooths out the good and bad years into one figure, so it summarises growth but says nothing about the risk or volatility along the way.

Worked example

An investment that grew from $10,000 to $25,000 over 7 years has a total return of 150%, which sounds huge — but the CAGR is about 14% a year. Expressing it annually lets you line it up against any other investment, a savings rate, or an index. Enter your own start and end values above.

Where CAGR is useful

Comparing investments held for different periods on one annualised scale.
Sanity-checking a claim — a big "total return" headline often shrinks to a modest annual rate once you divide it over the years.
Setting expectations — pair CAGR with the compound-interest calculator to project what a similar rate could do going forward.

Methodology & assumptions

CAGR = (ending value ÷ beginning value)^{(1 ÷ years)} − 1; total return = ending ÷ beginning − 1. It assumes a single lump sum with no additional contributions or withdrawals, and smooth compounding. Because it ignores volatility and cash flows, it is a comparison and summary measure, not a statement of risk or a projection. See our methodology and editorial policy.

Frequently Asked Questions

Is CAGR the same as average return?

No. A simple average of yearly returns overstates growth because it ignores compounding; CAGR is the true annualised rate.

Can CAGR be negative?

Yes — if the ending value is below the start, CAGR is negative, showing an annual loss rate.

Does it handle contributions?

No. CAGR is for a single lump sum. For regular contributions, use the compound-interest or SIP calculator.

Project it forward

See what a similar annual rate could grow to with regular contributions over time.

Open the compound interest calculator →

Related calculators

Sources

Uses the standard CAGR formula. It is a summary measure that ignores volatility and cash flows — not a projection or risk metric. See our methodology and editorial policy.