About this Average Return (CAGR)
Investments rarely grow in a straight line. They go up 20% one year and down 10% the next. The Compound Annual Growth Rate (CAGR) smooths out this volatility, giving you a single annualized number to describe the portfolio's performance over a specific time period.
Accuracy and testing
Review formula sources, default test cases, assumptions, unit handling, rounding rules, and changelog for this calculator.
How this calculator works
Inputs explained
Beginning Value
The initial value of the investment at the start of the period.
Ending Value
The final value of the investment at the end of the period.
Number of Years
The duration of the investment interval.
Understanding your results
Example scenarios
Doubling Money
If you invest $10,000 and it grows to $20,000 in 7 years, your total growth is 100%, but your CAGR is 10.4%.
Stock Market
Start: $1,000. End: $2,500. Years: 10. CAGR = 9.6%. This is a strong return.
Key Features
- Geometric Mean Calculation
- Total Growth %
- Simple Interface
Things to Keep in Mind
CAGR does not account for deposits or withdrawals made during the time period. For that, use XIRR (Internal Rate of Return).
Tips & Best Practices
- CAGR hides volatility. A 10% CAGR could mean steady 10% growth every year, or it could mean +50% one year and -20% the next.
- Use CAGR to compare your portfolio performance against benchmarks like the S&P 500.
Glossary of Terms
- Compound Annual Growth Rate
- The rate of return that would be required for an investment to grow from its beginning balance to its ending balance, assuming the profits were reinvested at the end of each year.
- Volatility
- The degree of variation of a trading price series over time.