CAGR Calculator

How to calculate CAGR (compound annual growth rate)

CAGR is the single steady yearly rate that would turn your starting value into your ending value. It smooths out the path, so a gain of 100% followed by a loss of 50% has a CAGR of 0%, even though the two percentages average 25%.

Adding money breaks the simple formula, because new money has had less time to grow. If you enter a yearly contribution, this calculator solves for the rate that fits, assuming each contribution arrives at the end of a year.

CAGR = (ending value ÷ starting value)^(1 ÷ years) − 1.

Worked example

An account that grows from $10,000 to $25,000 in 5 years has a CAGR of 2.5^(0.2) − 1, which is 20.11%.

With contributions the same $25,000 means much less. Start with $10,000, add $2,000 at each year end for 5 years, and finish at $25,000, and you put in $20,000 of your own money. The money-weighted return is about 6.4% a year.

What the result does not account for

• The path. Two accounts with equal CAGR can have very different drawdowns.
• Taxes and fees, unless your ending value is already net of them.
• Contribution timing other than year ends, and withdrawals.
• The future. A past CAGR says nothing certain about the next period.

Frequently asked questions