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CAGR Calculator

Compound annual growth rate from a start value, end value and number of years. The smoothed yearly rate that gets you from A to B.

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What is the CAGR formula?

CAGR = (end ÷ start)^(1 ÷ years) − 1. It is the steady annual rate that grows start into end.

Does CAGR assume smooth growth?

Yes. It ignores path volatility. Two journeys can share a CAGR and feel very different.

Why is CAGR lower than the average return?

Volatility. Up 50% then down 50% averages 0%, but £100 ends at £75, a CAGR of −13.4%. The average tells you what the years did. CAGR tells you what happened to the money.

What CAGR do you need to double your money in 10 years?

7.18% a year. Tenfold in 10 years needs 25.9%, which is worth remembering the next time someone promises it casually.

Does CAGR work if you added money along the way?

No. New money looks like growth, so CAGR flatters the result. For regular contributions use a money-weighted return such as IRR or XIRR.

CAGR needed to multiply your money

CAGR = multiple^(1 ÷ years) − 1. This is arithmetic, not a promise that anything pays it.

Multiple	5 years	10 years	20 years
1.5×	8.4%	4.1%	2.0%
2×	14.9%	7.2%	3.5%
3×	24.6%	11.6%	5.6%
5×	38.0%	17.5%	8.4%
10×	58.5%	25.9%	12.2%

The formula

CAGR = (end ÷ start)^(1 ÷ years) − 1

As a percent: CAGR% = CAGR × 100

It assumes growth compounds once a year and ignores the bumpy path in between.

Worked example

A portfolio grows from £50,000 to £80,000 over 5 years.

CAGR = (80000 ÷ 50000)^(1/5) − 1 = (1.6)^0.2 − 1 ≈ 9.86% a year.

That does not mean it rose 9.86% every year. It means a steady 9.86% would have landed on the same end value.

Methodology

How it calculates

Finds the steady annual rate that grows the start value into the end value over the years entered.

Formula

CAGR = (end ÷ start)^(1 ÷ years) − 1
As a percent: CAGR% = CAGR × 100
It assumes growth compounds once a year and ignores the bumpy path in between.

Assumptions

Assumes a smooth annualised path. Ignores volatility and interim cashflows.

Edge cases

Needs positive start and end values and years > 0.

Sources

None. Pure maths; no external rate or spec feed.

FAQ

Why is CAGR better than average return?

A simple average of yearly returns ignores compounding and can flatter a volatile path. CAGR answers one question: what constant yearly rate matches start to end.

Can years be a fraction?

Yes. 18 months is 1.5 years. Use the actual holding period for a fairer figure.

What if the end value is lower than the start?

CAGR comes out negative. That is a compound annual decline, sometimes called a CADR informally.

Not financial advice. This calculator is for education only. Double-check results before you make money decisions. Past moves do not predict future ones.