CAGR Calculator [Free Tool]
Turn any start value, end value, and time span into one clean compound annual growth rate. Compare investments of different lengths on a single, honest scale.
Disclaimer: Trading financial instruments involves risk, and everything on this page is provided for educational purposes only. Nothing here is financial advice or a recommendation to buy or sell any instrument.
Your investment grew at an average annual rate of 14.87% per year.
Total Growth
100.00%
Absolute Gain
$10000.00
Years to Double
5.00 yrs
How is this calculated?
CAGR = (Ending ÷ Starting)^(1 ÷ Years) − 1
Years includes fractional months and days.
Read the full user guide
Every parameter, formula, and worked example — a complete reference for this tool.
What is CAGR?
CAGR — the compound annual growth rate — is the single yearly rate that would take an investment from its starting value to its ending value, as if growth happened at a perfectly steady pace. It solves a real comparison problem: how do you fairly compare an investment that doubled in three years against one that doubled in six? Volatility, timing, and everything in between are compressed into one number, which is both its strength and its biggest blind spot. The calculator works the rate out from any start value, end value, and time span you give it.
Key concepts
Compound annual growth
The constant yearly rate that takes a starting value to an ending value over the period.
Volatility blindness
CAGR hides year-to-year swings — it is the smooth average, not the actual path.
A worked example with real numbers
- 1
Enter the start and end values
An account grew from $10,000 to $16,000 over three years.
- 2
Apply the formula
CAGR = (16,000 ÷ 10,000)^(1 ÷ 3) − 1 ≈ 1.1696 − 1 = 0.1696.
- 3
Read the result
The compound annual growth rate is roughly 17% per year, as if the growth were perfectly even.
- 4
Remember what it hides
The real path may have been +40%, −10%, +25%. CAGR smooths that into a single comparable 17%.
How to use it
Enter starting and ending values
The values at the start and end of the period.
Enter the time span
Years, months and days between the two values.
Read the CAGR
The annualized growth rate.
The formula, step by step
CAGR
CAGR = (Ending ÷ Starting) ^ (1 ÷ Years) − 1
Fractional years supported via months/days.
Mistakes traders make
✗ Confusing CAGR with the simple average of yearly returns
✓CAGR is geometric and reflects the actual compounded path; the arithmetic average overstates it and does not match your money.
✗ Comparing two CAGRs without matching the time windows
✓A 20% CAGR over two years and over ten years are very different achievements. Same window, same basis, or no comparison.
✗ Using CAGR to judge risk
✓CAGR says nothing about drawdowns. A 25% CAGR with a 50% drawdown is a very different animal from a smooth 15%.
When this tool fits — and when it does not
Use it when
- ✓When you need one comparable growth rate across investments of different lengths.
- ✓As a headline number in a backtest or portfolio report.
- ✓When smoothing out a bumpy multi-year record into an annual figure.
Skip it when
- ✗Evaluating short, volatile periods where a single year dominates the result.
- ✗Reading it as the return you will actually get each year.
- ✗Choosing investments by CAGR without checking the drawdown path.
Practical tips that actually help
Always pair CAGR with a drawdown number
The two together tell you both the speed and the roughness of the ride. CAGR alone is marketing; with drawdown it is analysis.
Use it as the common language for comparison
When comparing a stock, a fund, and your own strategy, CAGR is the level playing field — same units, same meaning.
Check the arithmetic with a shorter period
For periods under a year, fractional years keep CAGR meaningful. The tool handles months and days automatically.
Related & next steps
Frequently asked questions
CAGR vs average annual return — what is the difference?▾
Average return is a simple mean of yearly returns; CAGR is the geometric rate that actually connects start to end, always at or below the arithmetic average.
Why is CAGR always lower than the simple average return?▾
Because of the volatility drag. A 50% gain followed by a 50% loss averages to 0% but leaves you down 25%. CAGR reflects the actual compounding path, which is what your money experiences.
Can I use CAGR for returns shorter than a year?▾
Yes. The formula works for any span, including months and days — it simply annualizes the result using fractional years so the number stays comparable to annual figures.
What does CAGR leave out?▾
Everything about the journey: drawdowns, the sequence of returns, and risk. Two portfolios with identical CAGR can feel completely different to hold, so pair CAGR with a drawdown or volatility number.
Why is this tool often the first column in a backtest report?▾
Because it gives one comparable growth rate across strategies with different lengths and capital, making it a fair first screen — even though the deeper metrics still need to be checked.
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CAGR is a standard financial formula and does not reflect risk or interim volatility.
Disclaimer: The tools and content on this site are provided for educational purposes only and do not constitute investment advice. Trading and investing involve a substantial risk of loss, and past performance does not guarantee future results.