CAGR Calculator
Find the compound annual growth rate of any investment from its starting value, ending value, and the number of years.
Understanding the CAGR Calculator
This tool finds the compound annual growth rate (CAGR) of an investment between two dates: the single, smoothed yearly rate that would carry a starting value to an ending value over a set number of years. It is useful for investors comparing funds, stocks, or business metrics over different time spans on an apples-to-apples basis. Because it ignores interim volatility, CAGR shows the effective return as if growth were perfectly steady. Results are estimates for education, not a forecast of future performance.
How it works
Enter the beginning value, the ending value, and the number of years held. The calculator divides ending by beginning value, raises that ratio to the power of one divided by the number of years, and subtracts one to express the annualized rate as a percentage. Read the output as the constant yearly return that links your two endpoints. CAGR is not an average of yearly returns and does not reflect drawdowns, deposits, or withdrawals along the way. For partial years, use fractional values (for example, 2.5). Compare two investments only over identical periods.
Worked example
Suppose you invested $10,000 and it grew to $18,000 over 6 years. Divide 18,000 by 10,000 to get 1.8. Raise 1.8 to the power of 1/6 (about 0.1667), which equals roughly 1.1029. Subtract 1 to get 0.1029, or about 10.29%. So the investment compounded at approximately 10.29% per year, even though individual years likely returned more or less than that smoothed figure.
Tips & common mistakes
- CAGR hides volatility: two assets with the same CAGR can have very different risk and yearly swings.
- Use the exact holding period; mismatched timeframes make comparisons misleading.
- It does not account for added contributions or withdrawals; use IRR or money-weighted return for those.
- Past CAGR does not predict future returns; treat it as a backward-looking summary.
- For sub-year periods, enter years as a decimal rather than rounding to whole years.
Sources & methodology
- • U.S. Securities and Exchange Commission, Investor.gov — Compound interest and return basics (https://www.investor.gov)
- • CFA Institute — Time-value-of-money and return measurement concepts (https://www.cfainstitute.org)
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Reviewed by the TopOpenTools editorial team · Last updated June 2026. These tools provide general estimates for educational purposes only and are not financial, tax, insurance, investment, or medical advice. Verify important decisions with a qualified professional.
Frequently Asked Questions
What is CAGR?
Compound Annual Growth Rate is the smoothed, constant annual rate at which an investment would have grown from its starting value to its ending value over a period — as if it grew steadily each year.
What is the CAGR formula?
CAGR = (Final Value / Initial Value)^(1 / years) − 1. The result is expressed as a percentage.
How is CAGR different from total return?
Total return is the overall percentage gain across the whole period. CAGR converts that into a per-year rate, which makes it easy to compare investments held for different lengths of time.