Finance
Compound Annual Growth Rate Calculator
Calculate the annualized return of any investment from start value, end value, and time period.
In this article
What Is CAGR?
CAGR = (End/Start)^(1/Years) - 1. It shows the smoothed annual return, assuming reinvestment. $10K to $25K in 5 years = 20.1% CAGR, even if yearly returns varied wildly.
CAGR vs Average Return
They differ for volatile investments. +100% then -50% = 0% CAGR (money unchanged), but +25% simple average. CAGR reflects actual wealth growth; simple average can be misleading.
⚡ CalcWolf Insight
CAGR is the standard metric professional investors use. When funds advertise "12% returns," they mean CAGR. Understanding this single number is the most important concept for evaluating any investment claim.
Frequently asked questions
What is a good CAGR?▾
S&P 500 historical CAGR: ~10% nominal, ~7% real. Above 15% for 5+ years is excellent. Above 20% sustained is among the best in history (Buffett achieved ~20% over 55 years).
How is CAGR different from total return?▾
Total return is overall gain. CAGR normalizes to per-year. An investment doubling in 7 years = 100% total return but 10.4% CAGR. CAGR lets you compare investments across different time periods.
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