CAGR Calculator
Calculate the compound annual growth rate between two values.
CAGR (compound annual growth rate) smooths growth into a single yearly percentage — the standard way to compare investments or revenue over time. Enter the start value, end value and number of years.
Formula / method
Examples
14.87%
14.47%
What CAGR tells you
The Compound Annual Growth Rate is the single steady yearly rate that would take an investment from its starting value to its ending value over a given number of years. It smooths the bumps of real returns into one comparable figure, which is why it is a favourite for comparing investments over different periods.
Why it beats a simple average
Averaging yearly returns can mislead because it ignores compounding. A 50% gain followed by a 50% loss averages to zero, yet you actually end down 25%. CAGR captures the true compounded outcome. Remember that it describes only the start and end points — it says nothing about how volatile the ride was in between.
Where it's used
- Measuring an investment or portfolio's annualized return over several years
- Comparing the growth of two stocks or funds over the same period
- Reporting a company's revenue or user growth rate year over year
- Evaluating how fast a property's value has appreciated
- Benchmarking a business KPI across multiple years
Real-world examples
- An investment growing from $10,000 to $20,000 over 5 years has a CAGR of (20000/10000)^(1/5) − 1 ≈ 14.9% per year.
- Revenue rising from $1M to $1.5M in 3 years works out to a CAGR of about 14.5%.
- A fund that went $100 → $90 → $150 over two years still shows a CAGR of ≈ 22%, smoothing over the interim dip.
Did you know?
CAGR is often called the 'smoothed' rate of return: it reports the single steady annual rate that would turn the starting value into the ending value, deliberately ignoring the real peaks and dips along the way.
FAQ
How is CAGR different from total growth?
Total growth is the overall percentage change. CAGR converts that into a steady per-year rate, so you can compare periods of different lengths fairly.