Calculate compound annual growth rate for any investment.
CAGR = (ending value / beginning value)^(1 / years) − 1.
An investment growing from $10,000 to $18,000 over 5 years has a CAGR of about 12.5%.
Compound Annual Growth Rate is the steady annual rate that would grow an investment from its beginning to ending value over a given period.
Average return ignores compounding and volatility. CAGR reflects the true compounded growth, which is usually lower than the simple average.
No. CAGR is a smoothed rate and hides year-to-year swings. Two investments can have the same CAGR with very different risk.
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