CAGR calculator
Two figures and a term give the constant rate that would have taken the first to the second. It is the honest way to compare investments of different lengths.
Your figures
Result
- Total growth
- 150.00%
- Gain
- $15,000.00
- It multiplied by
- 2.500
Year by year at the CAGR rate
| Period | Value | Cumulative gain |
|---|---|---|
| Year 1 | $11,213.53 | $1,213.53 |
| Year 2 | $12,574.33 | $2,574.33 |
| Year 3 | $14,100.27 | $4,100.27 |
| Year 4 | $15,811.39 | $5,811.39 |
| Year 5 | $17,730.15 | $7,730.15 |
| Year 6 | $19,881.77 | $9,881.77 |
What we assume
- CAGR assumes constant growth, which almost never happens.
- Contributions and withdrawals along the way are not accounted for.
- No tax, fees or inflation are deducted.
- Both values must be positive: from zero there is no rate to calculate.
How it is calculated
CAGR is the nth root of total growth:
CAGR = (final value / starting value)^(1 / years) − 1
From £10,000 to £25,000 over 8 years: (2.5)^(1/8) − 1 = 12.14% a year.
Why the ordinary average will not do
If something rises 50% one year and falls 50% the next, the arithmetic mean says 0% and reality says you lost 25%: 100 → 150 → 75. The CAGR over those two years is −13.4%, which is what actually happened.
That is the whole point of the tool: chained percentages do not average by adding, they average by multiplying, and CAGR does exactly that.
What it is really for
For comparing things of different lengths. A fund up 40% over three years and another up 90% over eight cannot be compared on those figures: the first runs at 11.9% a year and the second at 8.3%. The first wins, even though the big number belongs to the second.
What it hides
The path. A 12% CAGR can come from eight quiet years or from a 40% crash followed by an enormous run, and there is no way to tell from here. That is why the table below says "this is how it would have grown", not "this is how it grew": it draws the equivalent straight line, not the real history.
It also ignores contributions. If you have been adding money along the way, the CAGR between opening and closing balance does not measure return, it measures return plus saving. For that you need an internal rate of return over the cash flows.
An example
An investment going from £10,000 to £25,000 over 8 years has a CAGR of 12.14%. Total growth is 150% and the money multiplied by 2.5.
Frequently asked questions
Is CAGR the same as annualised return?
Yes, the same figure under two names. "CAGR" gets used more about companies or sales and "annualised return" about investments, but the formula is identical.
Can it come out negative?
Yes, when the final value is lower than the starting one. It is then the rate at which value was lost each year, and it reads the same way: −8% a year over five years leaves you at 66% of the original.
Does it work for periods that are not whole years?
Yes, enter the fraction: 18 months is 1.5. What the formula cannot take is a term of zero, because the root would mean dividing by zero.
What if I have been paying in every month?
Then CAGR is not the tool. It would mix what the investment returned with what you put in, and the answer would mean nothing. That calls for an internal rate of return over all the flows.
Keep calculating
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Updated on 2026-09-11. Calculations run in your browser; nothing you type is sent to a server.