CAGR Calculator

Calculate compound annual growth rate from a starting value, ending value, and number of years, with a smoothed annual path.

Smoothed annual growth rate CAGR shows the constant annual rate that would take one starting value to one ending value across the chosen time period.

Assumptions

CAGR smooths the path into one constant rate. It is useful for comparison, but it does not show volatility, drawdowns, or the order in which gains and losses happened.

Result

8.45% CAGR

Smoothed annual growth needed to move from 10,000 to 15,000 over 5 years.

Total growth
50%
Growth multiple
1.5x
Annualized absolute change
1,000
Years to double
8.55

Smoothed path check

PeriodValue at CAGR
Year 110,844.72
Year 211,760.79
Year 312,754.25
Year 413,831.62
Year 515,000

How to use this result

CAGR is best for comparing two completed periods or for annualizing a multi-year outcome into one rate. It should not be mistaken for a forecast or for the actual year-by-year return path.

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Return Comparison

CAGR calculator guide: compound annual growth rate from a starting value, ending value, and years

A CAGR calculator converts a total multi-year change into one smoothed annual rate. It is useful when you want to compare investments, sales, revenue, portfolio values, or other growth paths on a like-for-like annual basis without mistaking the smoothed rate for the actual year-by-year path.

What CAGR is actually telling you

Compound annual growth rate answers one narrow question: what constant annual rate would transform the starting value into the ending value over the chosen number of years? That makes it a comparison tool, not a playback of the actual journey.

This distinction matters because real performance can be volatile. Two investments can end at the same value after five years and therefore have the same CAGR even if one experienced steep losses and recoveries while the other rose more smoothly.

Core CAGR maths

The calculation starts by dividing ending value by beginning value to get the overall growth multiple. That multiple is then converted into an annual rate by taking the nth root, where n is the number of years, and subtracting one.

Because CAGR is annualized, it is often easier to compare than raw total return when the compared periods are different lengths.

CAGR = (Ending value / Beginning value)^(1 / years) - 1

Converts the full-period growth multiple into one smoothed annual rate.

Total growth = (Ending value / Beginning value) - 1

Shows the full-period change before annualizing it into CAGR.

Worked example: 10,000 growing to 15,000 over 5 years

Suppose a value rises from 10,000 to 15,000 in 5 years. The total growth is 50%, but the CAGR is lower because it is the annualized rate that compounds to the same ending point over the whole period.

That is why CAGR is usually the better comparison number when periods are different lengths. It puts the result back into one annual frame instead of leaving you with raw cumulative growth that can be misleading on its own.

What CAGR does not show

CAGR does not show volatility, drawdowns, cash contributions, fees, taxes, or the order in which returns happened. If those factors matter, the smoothed rate may be a poor description of the real experience even if the annualization itself is mathematically correct.

Use CAGR to compare completed periods or to summarize one start-to-end path. Do not treat it as a forecast of the future or as proof that returns will arrive evenly each year.

Further reading

Frequently asked questions

What is the difference between CAGR and total return?

Total return shows the full-period change from start to finish. CAGR takes that same start and end point and expresses it as one smoothed annual rate, which makes comparisons easier when time periods differ.

 Can CAGR be negative?

Yes. If the ending value is lower than the starting value, the annualized rate is negative. That simply means the path would require annual decline rather than annual growth to reach the ending value.

 Does CAGR show volatility or risk?

No. CAGR smooths everything into one constant rate. It does not reveal whether the real path was steady, highly volatile, or dependent on big gains and losses in specific years.

 Should I use gross values or net-after-fee values?

For real decision-making, net values are usually more useful because fees and other costs reduce realized returns. Gross values may be fine for illustration, but they can overstate the experience investors or businesses actually keep.

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