CAGR calculator
Work out the smoothed annual growth rate of any investment from its start value, end value, and holding period.
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CAGR
What it measures
Compound Annual Growth Rate (CAGR) smooths out the volatility of an investment's return. It tells you what the annual growth rate would be if it grew at a steady rate every single year.
When to use it
Use this to compare investments held for different lengths of time, such as a stock held for 3 years against one held for 10.
Watch out for
CAGR hides volatility. An investment could crash 50% one year and double the next, and still show a respectable CAGR. Check the path of returns, not only the endpoints.
CAGR
The smoothed annual growth rate over time.
Above the long-run market average.S&P 500 long-run average: about 10%
How it works
CAGR = (End Value / Start Value)^(1/Years) − 1Compound annual growth rate answers a deceptively simple question: what steady yearly return would have produced this outcome? Actual investments lurch (up 30%, down 10%, flat), and simple averages of those swings systematically overstate performance. CAGR sidesteps the problem by only looking at the endpoints and the time between them, making it the honest way to compare investments held for different periods.
Worked example
€10,000 that became €25,000 in 8 years grew 150% in total, but the CAGR is (2.5)^(1/8) − 1 ≈ 12.1% per year. Compare that to a fund that turned €10,000 into €18,000 in 5 years: 80% total, but (1.8)^(1/5) − 1 ≈ 12.5% annually, so the 'smaller' gain was actually the better performer. Without annualizing, the comparison is meaningless.
Common questions
What is CAGR?
Compound Annual Growth Rate is the steady yearly rate that would take your investment from its start value to its end value over the period. It smooths out volatility into one comparable number.
How is CAGR different from average return?
A simple average overstates performance when returns are volatile: gaining 50% then losing 50% averages 0% but actually leaves you down 25%. CAGR reflects what you really ended up with.
What is a good CAGR for an investment?
The broad stock market has delivered roughly 10% nominal CAGR over long periods. Consistently beating that is rare; double-digit CAGR sustained for a decade puts a portfolio in elite company.
Last reviewed July 2026