CAGR Calculator
A CAGR calculator finds the compound annual growth rate between a starting value and an ending value across a set number of years. Enter what an investment, business metric, or other value was worth at the start, what it grew to (or fell to) by the end, and how many years passed between those two points. The calculator returns the annualized rate along with the total growth over the full period, so you can see both figures side by side instead of relying on just one. **A value that grows from 10,000 to 16,105.10 over 5 years has a CAGR of 10 percent.** That single annualized number is often easier to compare across investments, business years, or portfolios than a raw dollar change, because it strips out the length of the period and expresses growth on a consistent per-year basis. CAGR does not describe what happened in any single year along the way. It only describes the smooth path that would have produced the same ending value.
Quick answer
CAGR smooths uneven year-to-year performance into one annualized rate.
What this tells you
- •CAGR smooths uneven year-to-year performance into one annualized rate.
- •Use it to compare investments, business revenue, home values, or any other metric measured across multiple years.
- •A negative CAGR means the ending value is lower than the starting value, even if some years were positive along the way.
- •CAGR assumes smooth, steady growth. It does not reflect volatility or the actual path the value took between the start and end points.
- •The formula only needs three inputs: starting value, ending value, and the number of years between them.
- •CAGR applies to any positive starting and ending value, including business metrics like revenue, users, or units sold, not just investment accounts.
How to Use
- 1Enter the starting value at the beginning of the period.
- 2Enter the ending value at the end of the period.
- 3Enter the number of years between those two values. Decimal years are supported when needed, such as 1.5 years for an 18-month stretch.
- 4Calculate to see the annualized CAGR and the total growth percentage for the full period.
- 5Compare the CAGR against a benchmark rate, a prior period, or another investment to judge whether the pace of growth is strong or weak for your situation.
How It Works
Formula
CAGR = ((Ending value ÷ Starting value)^(1 ÷ Years) - 1) × 100
Total growth = ((Ending value ÷ Starting value) - 1) × 100CAGR converts the full change in value into a single annualized growth rate. Divide the ending value by the starting value to get the total growth ratio, then raise that ratio to the power of 1 divided by the number of years, and subtract 1 to isolate the per-year rate. Multiplying by 100 converts the result to a percentage. Total growth uses that same ratio without the exponent, so it reflects the change across the whole period instead of a single year. Both figures come from the same three inputs, starting value, ending value, and years, which is why CAGR is useful for comparing periods that had uneven results, as long as you remember it is a smoothed summary rather than a year-by-year record.
Calculation note: values are processed in the order shown above, using the current input units.
Worked Examples
Investment growth over 5 years
This investment averaged 10% annualized growth across the 5-year period, even if the actual yearly returns moved up and down. The 61.05% total growth figure confirms the ending value is about 1.61 times the starting value, which matches a 10% CAGR compounded five times.
Revenue growth over 4 years
Revenue ended 64% higher than it started, which works out to about 13.16% annualized growth when smoothed across 4 years. A finance team could use this figure to compare growth pace against a prior 4-year stretch or against a competitor's reported revenue trend.
Startup revenue over 3 years
Revenue increased sixfold over 3 years, for 500% total growth, which compounds to roughly 81.71% annualized. High CAGR figures like this are common in early-stage companies growing off a small base and tend to slow as revenue scales up.
Home value over 7 years
A home that rose from $320,000 to $410,000 over 7 years grew 28.13% in total, which annualizes to about 3.60% per year. That is a realistic long-run appreciation rate for many housing markets and can be compared against local price indexes or inflation.
Declining account value over 4 years
An account that fell from $50,000 to $38,000 over 4 years lost 24% of its value in total, which is a CAGR of about -6.63% per year. Negative CAGR results are valid whenever the ending value is lower than the starting value, and they show the annualized pace of the decline.
What CAGR tells you
Use CAGR and total growth together so you do not lose context.
| Metric | What it shows | What it can hide |
|---|---|---|
| CAGR | The smoothed annualized rate across the full period | Volatility and the path between the start and end values |
| Total growth | The full percentage change from start to finish | How fast or slow the growth happened each year |
| Negative CAGR | That the ending value finished lower than the starting value | Whether the decline was gradual or came from one bad year |
If you need year-by-year detail, review the actual annual returns alongside CAGR, and pair it with a benchmark index or industry growth rate for added context.
What Counts as a Good CAGR?
There is no single CAGR that counts as good for every situation, because the right benchmark depends on what is being measured. A diversified stock portfolio might target a long-run CAGR near the historical average of broad market indexes, often cited in the 7 to 10 percent range before inflation, while a savings account or short-term bond fund would be judged against much lower benchmarks.
For a business, a strong revenue CAGR depends heavily on company size and stage. A small startup growing off a tiny base can post triple-digit annualized growth rates that would be unrealistic for an established company already generating billions in revenue. Compare CAGR against direct competitors, industry averages, or the company's own prior periods rather than a fixed target.
The number of years also changes how much weight to give a CAGR figure. A high CAGR calculated over 1 or 2 years can reflect a temporary swing rather than a durable growth trend, while a CAGR calculated over 10 years or more is harder to sustain and generally more meaningful as a sign of durable performance.
Common mistakes
- Treating CAGR as the actual return earned every single year, instead of a smoothed average
- Comparing results from periods with different risk, fees, or cash flows without extra context
- Using zero or negative starting values, which do not work with the CAGR formula
- Ignoring contributions or withdrawals that happened during the period, since CAGR cannot account for money moving in or out
- Judging a short 1 or 2 year CAGR as a reliable long-term growth trend
- Assuming CAGR predicts future growth, when it only describes what already happened
Limitations
CAGR uses only the starting value, ending value, and time period. It does not show volatility, interim drawdowns, contributions, withdrawals, fees, taxes, or inflation. If money moved in or out during the period, such as regular deposits into an investment account, you may need a different return measure such as IRR or time-weighted return, since CAGR assumes a single lump sum at the start and a single value at the end. CAGR also gives more weight to the endpoints than to the path between them, so two investments with identical CAGR figures can have had very different levels of risk and volatility along the way. Past CAGR is a historical description, not a forecast, and it does not predict what a future growth rate will be.
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