CAGR Calculator

The Compound Annual Growth Rate (CAGR) measures the smoothed, annualized return of an investment over a specified period. Unlike simple ROI, which only captures the total gain from start to finish without accounting for time, CAGR factors in the duration of the investment to show the equivalent steady annual growth rate that would have produced the same end result. This makes CAGR the gold standard for comparing investments held over different timeframes — a 50% return over two years and a 50% return over ten years are vastly different in annual performance terms, but CAGR captures that difference precisely. Financial analysts use it to evaluate portfolio performance, benchmark funds against indices, and compare revenue growth rates across companies of different sizes. Corporate finance teams report CAGR to communicate multi-year revenue or earnings growth trends. When a mutual fund or ETF advertises its 'ten-year annualized return,' that figure is its CAGR. Investors also use CAGR to set realistic return expectations — if a fund needs to grow from $100,000 to $500,000 over 20 years, the required CAGR is 8.38%, which can be compared against historical market averages. This calculator returns the CAGR alongside total ROI and total profit, giving you the full picture of both annual rate and cumulative gain. It handles declining investments too, returning a negative CAGR when the ending value is lower than the beginning value.

CAGR is calculated using the formula: CAGR = (endingValue ÷ beginningValue)^(1 ÷ years) − 1, expressed as a percentage. The core idea is finding the nth-root of the total growth ratio, where n is the number of years. This nth-root operation effectively 'de-compounds' the total growth back into an equivalent annual rate. For example, if an investment grows from $10,000 to $15,000 over 5 years, the total ratio is 1.5. The fifth root of 1.5 (i.e., 1.5^0.2) equals approximately 1.0845, so the CAGR is 8.45%. This means if the investment had grown at exactly 8.45% each year, compounded annually, it would have reached precisely $15,000 after 5 years. CAGR can also be negative — if the ending value is less than the beginning value, the ratio is below 1, and the nth-root minus 1 yields a negative percentage representing the annual rate of decline.