CAGR Calculator
Calculate the Compound Annual Growth Rate of an investment over a period of time.
What is CAGR
CAGR (Compound Annual Growth Rate) measures the mean annual growth rate of an investment over a specified time period longer than one year. It smooths out returns to show a single, steady rate of growth.
CAGR Formula
CAGR = ((Ending Value ÷ Beginning Value)^(1 ÷ Years) − 1) × 100
Ending Value = final investment value
Years = total holding period
CAGR Calculation Example
Compares investments over different periods
Smooths out volatile yearly returns
Easy to communicate a single growth rate
Useful for revenue and portfolio analysis
Single, comparable growth metric
Reflects the effect of compounding
Standard measure in finance
Helps set realistic return expectations
CAGR assumes steady growth and ignores volatility, additional contributions, and withdrawals during the period. Actual year-to-year returns may differ significantly.
Frequently Asked Questions
CAGR (Compound Annual Growth Rate) is the smoothed average annual growth rate of an investment over a period, assuming steady compounding.
CAGR accounts for compounding, giving a more accurate picture of growth than a simple average of yearly returns.
Yes. If the ending value is lower than the beginning value, the CAGR will be negative, indicating a decline.
No. CAGR assumes smooth growth and ignores year-to-year ups and downs in value.