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CAGR calculator

Compound annual growth rate from a starting and ending value.

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About this calculator

Compound Annual Growth Rate (CAGR) normalizes a multi-year return into a single annualized number — the rate at which an investment would have to grow each year, compounded, to go from its starting value to its ending value over the period. CAGR is the standard way to compare investments with different time horizons and volatilities.

The formula

CAGR = (End / Begin)1/years − 1. So $10,000 growing to $25,000 in 7 years: (25000 / 10000)1/7 − 1 = 13.97%. Easy to compute, hard to fake.

What CAGR hides

CAGR collapses the path into a single number, ignoring volatility. A fund that goes 10%, −20%, 40%, 10% over 4 years and one that goes 9% every year both have the same CAGR (~8.7%) but very different risk profiles. The first might be a leveraged tech fund; the second might be an annuity. Always look at standard deviation or max drawdown alongside CAGR.

Comparing across asset classes

Historical CAGRs (1926–2020 US data): large-cap stocks ~10%, small-cap stocks ~12%, long-term bonds ~6%, T-bills ~3%, inflation ~3%. Real (after inflation) returns are about 3 percentage points lower for all of these. When someone quotes a strategy's return, ask "over how long, in what conditions, and after fees?" — many published CAGRs ignore one of those.

Frequently asked questions

CAGR vs average annual return — what’s the difference?
Simple average ignores compounding. A return of +50% then −50% averages 0% but CAGR is −13.4% — because $100 → $150 → $75 is a real loss. Always use CAGR (geometric mean) for multi-year performance comparison; simple averages overstate returns in volatile assets.
Can CAGR be negative?
Yes — if the ending value is less than the starting value, CAGR is negative. It represents the constant rate of loss that would produce the same outcome.
What’s a good CAGR?
Depends on the asset class and risk. 8–12% CAGR is solid for equities. Above 20% sustained is exceptional (only the best hedge funds and venture capital portfolios over long horizons clear this). Be skeptical of any pitch claiming sustained 25%+ — the math says it usually doesn’t exist.
Does this work for periods less than 1 year?
You can compute it, but a sub-1-year "annualized" return extrapolates a short result over a full year, which is misleading. Use simple total return for short periods.

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CAGR from $10k → $25k over 7 years | SuperCalculator