Turn a starting value, an ending value and a number of years into one steady yearly growth rate, so returns over different lengths of time can be compared fairly.
Compound annual growth rate
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Years to double at this rate
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How it works
CAGR is the single yearly rate that would grow the starting value into the ending value if it grew by the same amount every year. Real returns bounce around, but CAGR smooths them into one comparable number.
That makes it the fair way to compare a fund that made 60% over five years with a stock that made 40% over three: 9.9% a year against 11.9% a year.
Worked example
An investment that grows from $10,000 to $25,000 in 7 years has a total return of 150%. The CAGR is (25,000 ÷ 10,000)^(1 ÷ 7) − 1 = about 13.99% a year.
CAGR questions
Is CAGR the same as average annual return?
No. The simple average of yearly returns overstates growth when returns swing. A year up 50% followed by a year down 50% averages 0%, but the money is down 25%; CAGR shows that loss.
Does CAGR include contributions?
No. It assumes one starting amount with nothing added or taken out. If you added money along the way, the result will overstate the return.
Can I use part years?
Yes. Enter years as a decimal, for example 2.5 for two and a half years.
For informational and educational purposes only. Not investment advice, and not a recommendation to buy or sell any security. Results are estimates from the numbers you enter.