CAGR Calculator – Compound Annual Growth Rate
Use this free CAGR calculator to convert a change in value over time into an average annual growth rate. Enter the starting value, ending value and the number of years to see how fast the investment grew per year on average.
CAGR Calculator
Calculate the compound annual growth rate (CAGR) between a starting value and an ending value over a given number of years.
How the CAGR formula works
CAGR treats the growth of an investment as if it had increased at a steady rate every year, even though actual returns may have varied. If an investment grows from a value V0 to Vn over t years, the formula is:
CAGR = (Vn ÷ V0)1/t − 1
This gives a single annual growth rate that, if applied consistently, would produce the same start and end values. It is useful for comparing funds, portfolios or business metrics over different periods.
Using CAGR to compare investments
Because CAGR is annualised, it lets you compare returns across different time periods more fairly. For example, you can compare a 3-year fund return with a 7-year return from another fund or a 5-year growth in business revenue. The higher the CAGR, the faster the average yearly growth, assuming similar risk.
Remember that CAGR is a summary statistic: it hides year-to-year volatility. Two investments can have the same CAGR but very different paths and risk profiles. Use CAGR together with other metrics and your risk tolerance before making decisions.