CAGR (Compound Annual Growth Rate) Calculator
Enter a starting value, ending value and number of years to get the compound annual growth rate (CAGR), total return, growth multiple and absolute change. CAGR smooths the total growth into a steady per-year rate so you can compare investments, revenue, populations or any growth metric on the same footing.
Please enter a valid number
CAGR (annualised)
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Total return
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Growth multiple
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Absolute change
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CAGR smooths growth across the whole period; it does not capture year-to-year volatility. Useful for comparing investments, revenue, populations or user growth — but it is not the same as the actual return in any single year.
Formula
CAGR = (end ÷ start)^(1 ÷ years) − 1 Total return = (end ÷ start) − 1 Growth multiple = end ÷ start
- · CAGR is the geometric-mean annual growth rate — it spreads the total growth evenly across each year of the period.
- · It differs from the arithmetic mean: a +50% / −50% two-year sequence has an arithmetic average of 0% but a CAGR of about −13.4%, because 1.5 × 0.5 = 0.75 (a 25% net loss).
- · CAGR hides year-to-year volatility — two investments with the same CAGR can have very different risk profiles, so always look at standard deviation or drawdowns alongside it.
- · Starting value must be positive; ending value of 0 implies CAGR = −100%; negative ending values are not supported (CAGR is undefined for sign changes).
- · Years can be fractional (e.g. 2.5).
- · Typical uses: comparing fund performance over a 10-year window, estimating long-run revenue or user growth, or sizing realistic projections from historical data.
- · Reference: CFA Institute, Investopedia and Damodaran "Applied Corporate Finance" — standard geometric-return definition.
Frequently asked
How is CAGR different from "annualised return"?
For a single lump-sum investment with no contributions or withdrawals in between, CAGR and annualised return are numerically identical — both equal (end / start)^(1 / years) − 1. The naming difference is mostly context: "CAGR" is common when describing non-financial growth (users, revenue, population), while "annualised return" is the typical fund or stock marketing label. If there are recurring contributions, you should use IRR (internal rate of return) instead — IRR takes the timing of each cash flow into account.
Why can two investments with the same CAGR feel very different?
CAGR only describes the average growth between the start and the end — it ignores the path. Two investments can end at the same CAGR while one delivered steady 7% each year and the other lived through a −40% drawdown before recovering. The risk-adjusted experience, the maximum drawdown, and the sequence-of-returns risk are very different. Pair CAGR with standard deviation, Sharpe ratio or worst-drawdown when comparing options.
Can I still use CAGR if I made contributions or withdrawals along the way?
Plugging just start, end and years into CAGR misleads when there were extra deposits or withdrawals — the formula assumes a clean lump sum. For accuracy compute IRR (internal rate of return), which money-weights each cash flow by its date. To judge the fund itself rather than the investor's behaviour, use the time-weighted return (TWR): split the period at every contribution, compute the CAGR of each segment and chain them geometrically.
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