What does CAGR tell you?

CAGR (Compound Annual Growth Rate) represents the mean annual growth rate of an investment over a specified period of time longer than one year. It smooths out the returns of an investment over time.

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CAGR Calculator

Calculate the Compounded Annual Growth Rate (CAGR) of an investment over a period of time.

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Beginning Value of Investment

Ending Value of Investment

Period (Years)

What is CAGR (Compound Annual Growth Rate)?

CAGR is one of the most accurate ways to calculate and determine returns for anything that can rise or fall in value over time. It represents the "smoothed" annual rate of return as if the investment had grown at a steady rate on a compounded basis.

The CAGR Formula

        CAGR = [(Ending Value / Beginning Value)1/n - 1] × 100
    

(where n is the number of years)

CAGR vs. Average Return

Unlike a simple average, CAGR accounts for the fact that investment returns are compounded. If your portfolio drops 50% one year and gains 50% the next, your average return is 0%, but your actual wealth has decreased by 25%. CAGR reflects this reality.

Pro Tip: Use CAGR to compare the performance of mutual funds, stocks, or your own business growth over long periods.