General
CAGR Calculator
Calculate the compound annual growth rate (CAGR) between a starting value and an ending value over any number of years.
CAGR
12.47%
Total growth
80.00%
Growth multiple
1.80×
Growing from $10,000 to $18,000 over 5 years is a compound annual growth rate of 12.47% — a total growth of 80.00% across the whole period.
CAGR is a smoothing construct: it's the constant annual rate that would produce the same total growth, not a claim that growth was steady in any individual year. The actual path could have had sharp ups and downs and still averaged this rate.
Value implied by a constant CAGR
This is the smooth path implied by holding CAGR constant every year, not the actual year-by-year path — real growth is rarely this even.
Your numbers
The formula
CAGR = [(Final Value ÷ Initial Value) ^ (1 ÷ Years)] − 1
The exponent 1 ÷ years converts the total growth multiple (final value ÷ initial value) into a per-year rate — the same operation the ROI calculator uses for its annualized return, generalized here to any two values with no other cash flows in between.
How to read it
CAGR shows up everywhere in finance and business — fund performance sheets, revenue growth slides, population statistics — because it compresses a multi-year change into one comparable number. Two funds, two companies, or two countries with completely different starting points and time horizons can be placed on equal footing once their growth is expressed this way.
The trade-off is that CAGR erases the path. A value that doubled in year one and did nothing for the next nine years has the same 10-year CAGR as one that grew steadily every single year. Before treating a CAGR figure as evidence of consistency, it's worth checking the actual year-by-year numbers behind it.
CAGR is a nominal figure — it says nothing about risk, volatility, or inflation along the way. A high CAGR achieved with wild swings is a very different proposition from the same CAGR achieved steadily, even though the formula can't tell them apart.
Frequently asked
What does CAGR actually mean?+
CAGR is the constant annual growth rate that would take your initial value to your final value over the given number of years, if growth were perfectly smooth. It's a mathematical construct for comparison purposes — it doesn't claim the value actually grew at that exact rate every single year.
Why use CAGR instead of just total growth?+
Total growth doesn't account for how long it took. A 50% total gain over 2 years and a 50% total gain over 10 years are very different outcomes, but they'd look identical as a raw percentage. CAGR converts both into a per-year rate, making investments or businesses with different time horizons directly comparable.
Does CAGR smooth over volatility?+
Yes, completely — that's both its strength and its limitation. A value that fell sharply and then recovered can have the same CAGR as one that grew steadily the whole time. CAGR only looks at the start and end points; it says nothing about what happened in between.
Can CAGR be negative?+
Yes. If the final value is lower than the initial value, CAGR is negative — the constant annual rate of decline that would produce the same result. If the final value is 0 (a total loss), CAGR is -100% regardless of how many years it took.
Does this account for inflation?+
No — this is a nominal (raw, unadjusted) growth rate. To see what a growth rate is worth after inflation, use the real return calculator with this CAGR as the nominal return.
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Educational tool, not advice. This calculator illustrates a standard formula using the numbers you enter. It does not account for your full financial picture, taxes, or local market conditions, and it is not a recommendation to buy, sell, or hold any asset. Speak with a licensed professional before making investment decisions.