What the CAGR Calculator does
This CAGR calculator finds the compound annual growth rate between a start value and an end value: the single yearly rate that would turn one into the other if growth had been perfectly smooth. Enter the period as a number of years or as two exact dates, and it also shows the simple average growth for comparison and, if you want, where the value would go if that rate continued.
CAGR is the standard way to compare growth across different lengths of time - an investment held for 7 years against one held for 3, revenue between two financial year-ends, or the growth of a user base. It describes the start and the end only; the page says plainly what that leaves out.
How to use it
- Enter the start value and the end value in the same unit - money, users, units sold. The start must be above zero.
- Give the period as a number of years, or switch to exact dates. With dates, years are counted as actual days divided by 365.25.
- Optionally set a number of years to project forward. The projection simply continues the same rate and is labelled as an illustration.
- Read the CAGR, compare it with the simple average, and download the year-by-year path if you need it for a report.
Reading the results
CAGR is a smoothed rate. A value that rose 50% and then fell 20% has the same CAGR as one that grew steadily - about 9.5% a year over the two years - even though holding it felt very different.
The simple average (total change divided by years) is always higher than the CAGR when growth is positive, because it ignores compounding. Quoting the simple average as an annual return overstates it.
CAGR ignores money added or taken out along the way. If you contributed or withdrew during the period, the growth of the balance is not your return; use the XIRR calculator with the dated cash flows instead.
Worked example: a fund held for 7 years
An investment of 10,000 is worth 18,000 seven years later, with no money added or withdrawn. The growth multiple is 18,000 / 10,000 = 1.8.
CAGR = 1.8^(1/7) - 1. The seventh root of 1.8 is 1.087596, so the CAGR is 8.76% a year. Check: 10,000 x 1.087596^7 = 18,000.
The simple average would be the 80% total gain divided by 7, or 11.43% a year - almost three points higher, and wrong as a description of yearly growth. If 8.76% continued for another 5 years, 18,000 would become about 27,391; that projection is arithmetic, not a forecast.
Formulas and scoring rules
- CAGR
CAGR = (end / start)^(1 / years) - 1Requires start > 0 and end >= 0.- Years from dates
years = (end date - start date in days) / 365.25365.25 averages leap years, so 1 January 2020 to 1 January 2024 is exactly 4 years.- Simple average growth
average = (end / start - 1) / years- Path and projection
value(t) = start x (1 + CAGR)^tResults are shown to 2 decimals; the rate to 2 decimals of a percent.
When CAGR is the wrong number
CAGR answers one question: what constant yearly rate links these two values? It is the right tool for comparing growth of a single quantity over different periods. It is the wrong tool when money moved in or out during the period (use XIRR), when you care about the path and its risk (look at yearly returns and drawdowns), or when either value is zero or negative, where no compound rate exists.
Be wary of start and end points chosen after the fact. The same series can show a very different CAGR depending on whether it starts at a low or a high, so state the dates whenever you quote one.
Limitations: what the result does not prove
- It uses only the two values you enter. It says nothing about volatility, losses along the way, or the order of good and bad years.
- It is not a return on contributions. Deposits and withdrawals during the period make the balance grow faster or slower than the investment did.
- It cannot describe growth from zero or a negative start value, or a change of sign; the page says so instead of inventing a rate.
- Projections assume the historical rate continues. Past growth does not predict future growth.
Privacy: where your data goes
Everything you paste, type or drop is processed in this browser tab. It is not uploaded, logged, stored or sent to analytics. Session recording and tag-manager scripts are switched off on this page.
Standards and sources
- Investor.gov (US SEC) - compound interest calculator
- Microsoft Support - RRI function (equivalent rate for growth)
Frequently asked questions
How is CAGR different from average annual return?
The arithmetic average adds each year's return and divides by the number of years; CAGR is the geometric average that actually links the start and end values. Returns of +50% and -20% average 15% arithmetically, but the CAGR is 9.54%, because 1.5 x 0.8 = 1.2 over two years.
Can CAGR be negative?
Yes. If the end value is lower than the start, CAGR is negative. A value that falls from 250 to 160 over 4 years has a CAGR of about -10.6% a year. It cannot go below -100%, which would mean the value vanished.
How do I calculate CAGR between two dates rather than whole years?
Count the days between the dates and divide by 365.25 to get years, then use the usual formula. Choose Exact dates in the calculator and it does the counting, so a period from 31 March 2019 to 30 September 2025 is treated as about 6.5 years, not 6 or 7.
Should I use CAGR or XIRR for my SIP or regular investments?
Use XIRR. CAGR assumes a single amount invested at the start and left alone. With monthly contributions, most of the money was invested for less than the full period, so the CAGR of the balance overstates the return. XIRR accounts for when each amount went in.
What is a good CAGR?
There is no universal figure; it depends on the asset, the period, inflation and the risk taken. Compare a CAGR with the inflation rate over the same years and with a relevant benchmark measured over exactly the same dates, rather than with a rule of thumb.
Why does the simple average look higher than the CAGR?
Because it ignores compounding. An 80% gain over 7 years is 11.43% a year if you divide, but growing at 11.43% compounded would give about 113% in 7 years, not 80%. The CAGR of 8.76% is the rate that really produces an 80% gain.
Last reviewed by the A2Z.Tools team against the sources listed above.
