CAGR Calculator
CAGR (compound annual growth rate) is the constant yearly rate that would grow a beginning value into an ending value over a selected period, assuming steady compounding. CAGR smooths the path. It does not show volatility, drawdowns, cash flows added during the period, or taxes.
Estimate CAGR
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CAGR
14.47%
The total return is 50.00% over 3 years, equal to 14.47% CAGR if growth compounded steadily.
Breakdown
- Total return
- 50.00%
- Beginning value
- $10,000
- Ending value
- $15,000
How the CAGR calculator works
CAGR is a time-normalized growth rate for comparing results across different holding periods. It describes history, not a forecast of future yearly returns.
The calculator compares ending value with beginning value, then solves for the single yearly compound rate that would produce the same ending balance over the number of years you enter.
total_return = (ending_value - beginning_value) / beginning_value
CAGR = (ending_value / beginning_value)^(1 / years) - 1- Beginning value must be greater than zero.
- Years must be greater than zero because the formula annualizes total growth.
- Include reinvested dividends in both values if you want total return rather than price return.
When to use it
Helpful for
- Comparing investments or metrics held for different lengths of time.
- Translating a multi-year outcome into one per-year compound rate.
- Benchmarking revenue, earnings, or portfolio growth on equal footing.
Can mislead when
- Cash was added or withdrawn during the period.
- The path was volatile and the smoothed rate hides large interim losses.
- Beginning or ending values omit fees, taxes, or distributions that matter.
Common mistakes
- Comparing total returns across different time spans without annualizing them.
- Using price-only values when dividends materially affected total return.
- Treating a smoothed CAGR as if the investment earned that exact rate every year.
- Ignoring contributions or withdrawals during the measurement window.
Worked example
The default inputs use a 10000 beginning value, a 15000 ending value, and a 3-year period. Total return is 50.00%, and CAGR is 14.47%.
| Input | Value |
|---|---|
| Total return | 50.00% |
| CAGR | 14.47% |
Frequently asked questions
Total return is the full percentage gain over the whole period. CAGR expresses that same outcome as a constant yearly compound rate, which makes different holding periods comparable.
Yes. When computed from a beginning value, ending value, and years held, CAGR and annualized return use the same formula.
Only if your beginning and ending values already reflect reinvested dividends. Price-only inputs give price return; total-value inputs give total return.
Yes. If the ending value is below the beginning value, CAGR is negative, indicating an average annual decline over the period.
Compare growth with fundamentals
Use the screener to compare revenue and earnings growth before relying on backward-looking CAGR alone.