What CAGR tells you
The compound annual growth rate is the single yearly rate that, compounded, turns the starting value into the ending value. It lets you compare investments, revenues or populations over different periods on the same footing. It is not the average of yearly returns: a +50% year followed by a −50% year averages 0% but leaves you with 75% of your money, a CAGR of about −13.4%.
Formula
CAGR = (end ÷ start)^(1 ÷ years) − 1.
Worked examples
An investment grows from $10,000 to $20,000 in 5 years: 2^(1/5) − 1 = 14.87% a year.
From $1,000 to $1,500 in 3 years: 1.5^(1/3) − 1 = 14.47%.
From $1,000 down to $810 in 2 years: 0.81^(1/2) − 1 = −10% a year.
Limits
CAGR hides volatility and ignores deposits and withdrawals. If you added money along the way, the CAGR of the account balance overstates your return.
How this works
The page divides the ending value by the starting value, raises the result to the power 1 ÷ years, subtracts one and shows it as a percentage. Total growth is the ending value divided by the starting value minus one, and the multiple is the plain ratio. The starting value must be above zero. Everything runs in your browser.
Frequently asked
How do you calculate CAGR?
(End ÷ start)^(1 ÷ years) − 1. For $10,000 to $20,000 in 5 years, 2^0.2 − 1 = 14.87%.
Is CAGR the same as average return?
No. The arithmetic average of yearly returns overstates growth when returns vary; CAGR is the geometric rate.
Can CAGR be negative?
Yes, when the ending value is below the starting value.
Does CAGR account for deposits?
No. With deposits or withdrawals, use an IRR or money-weighted return instead.
Sources
- Investor.gov (U.S. SEC) — Compound interest calculator and method
- Wikipedia — Compound annual growth rate
Reviewed Oct 17, 2026 · test vectors fixtures/calculators/finance/cagr-calculator/