CAGR Calculator

Calculate the Compound Annual Growth Rate—the geometric progression ratio that provides a constant rate of return over a specific time period.

Investment Data

Opening Value

Closing Value

Time Scale (Years)

Performance Metrics

Geometric Mean (CAGR)14.87%

Cumulative Growth+100.0%

Smoothed Value Curve

The chart shows the steady-state growth required to reach your target, eliminating the volatility of actual market movements.

Overview

Compound Annual Growth Rate (CAGR) is a useful measure of growth over multiple time periods. It can be thought of as the growth rate that gets you from the initial investment value to the ending investment value if you assume that the investment has been compounding over the specified time period. Unlike average return, CAGR 'smooths' performance, ignoring the volatility and sequence of returns.

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Pro Tips

How does CAGR differ from Average Return?: Average return ignores the arithmetic reality of compounding. For example, a 50% loss followed by a 50% gain results in a 0% average return, but your actual portfolio would be down 25%. CAGR captures this reality.
What are the limitations of CAGR?: CAGR is a retrospective metric. It tells you what happened in the past but does not account for the risk or volatility taken to achieve that return. It also assumes reinvestment of all proceeds.
Can CAGR be negative?: Yes. A negative CAGR indicates that the investment's value decreased over the period, resulting in an annualized loss.

Fun Facts

"The CAGR is often used to compare the performance of two different investments over the same time period."
"Venture capitalists and private equity firms use CAGR to report 'internal rates of return' to their investors."
"Most publicly traded companies report their revenue and earnings growth using CAGR because it provides a cleaner narrative than year-over-year swings."

Formula: CAGR = [(End / Start)^(1 / Years)] - 1

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