CAGR calculator
For guidance only. This is not financial advice.
The formula
CAGR = (ending value ÷ starting value)^(1 ÷ years) − 1
It is the constant yearly return that would take you from the starting value to the ending value.
Worked example
You invested $10,000 and have $18,000 eight years later:
- Multiple: 18,000 ÷ 10,000 = 1.8.
- Eighth root of 1.8 = 1.0762.
- CAGR: 7.62% a year.
- Total return: 80%, a gain of $8,000.
Check: 10,000 × 1.0762^8 ≈ 18,000.
Using the result
CAGR lets you compare investments held for different periods on the same basis. Compare it with inflation over the same period to see what you really gained. Taxes and fees are not included unless your values already reflect them.
Read what CAGR tells you and what it hides or project ahead with the compound interest calculator.
Frequently asked questions
Why not just divide the total return by the years?
Because that ignores compounding. An 80% gain over 8 years is not 10% a year. It is 7.62% a year, because each year builds on the last.
Does it work if I added money along the way?
No. CAGR compares only a starting and an ending value. With deposits or withdrawals in between, the result would not reflect your real return.
Does CAGR show risk?
No. Two investments with the same CAGR can take very different paths. It also says nothing about future returns.