About the CAGR Calculator
CAGR (Compound Annual Growth Rate) is the smooth annual rate at which an investment would have grown from its starting value to its ending value over a period — the fairest single number to compare investments of different sizes and durations.
CAGR vs absolute return
Absolute return is the total percentage gain over the whole period; CAGR converts that into a per-year compounded rate. For example, 100% over 5 years is a CAGR of about 14.9% a year. CAGR is the better yardstick when comparing options held for different lengths of time.
CAGR Calculator — frequently asked questions
How is CAGR calculated?
CAGR = (final value ÷ initial value)^(1 ÷ years) − 1. It assumes steady compounding and smooths out year-to-year ups and downs.
Is a higher CAGR always better?
A higher CAGR means faster compounding, but always weigh it against the risk taken. CAGR also hides volatility — two investments with the same CAGR can have very different year-to-year paths.
What is a good CAGR?
It depends on the asset class and risk. There is no universal benchmark; compare like with like and against your own goals. Past CAGR does not guarantee future returns.