CAGR Calculator

The Difference Between CAGR and Average Return

Simple average returns can be misleading. If an investment grows 50% in year one and drops 50% in year two, the average return is 0%, but you have actually lost 25% of your initial capital. The CAGR accounts for this by looking only at the Beginning Value and the Ending Value over a set Number of Years. This gives you the "real" geometric growth rate that actually occurred.

If you find that your CAGR is lower than the rate of inflation, your investment is losing purchasing power. You can verify this using the Inflation Calculator. Conversely, if you want to see how much you would need to save at a specific CAGR to reach a goal, use the Savings Calculator.

Using the Tool Step-by-Step

1. Enter the Beginning Value of your investment or business metric.
2. Enter the Ending Value (the current or final valuation).
3. Input the Number of Years between those two data points.
4. Click Run to generate the CAGR percentage.

The tool also allows you to Copy the result or Reset the fields if you want to analyze multiple different investment timeframes or asset classes side-by-side.

Important Limitations

CAGR is a retrospective tool; it describes what happened in the past but does not guarantee future results. It also assumes that all profits were reinvested. It does not account for the volatility that occurred *during* the years—two investments with the same CAGR might have had very different levels of risk and price swings along the way.

Frequently Asked Questions