CAGR Calculator (Compound Annual Growth Rate)
Measure the smoothed annualized return of your capital without distortion from short-term market volatility. CAGR provides the precise geometric growth rate required to compare divergent assets, index funds, and startup revenue performance.
Starting capital or valuation at beginning of period
Final portfolio balance or liquidation proceeds
Elapsed holding period in decimal years
Annualized geometric return required to grow initial sum to final sum
How to Use This Calculator
- Enter the starting balance or initial purchase cost of your investment asset.
- Enter the terminal market valuation or liquidation value at the end of the term.
- Specify the duration in elapsed years (fractional years such as 3.5 are accepted).
- Review the calculated CAGR alongside total nominal dollar gain and cumulative percentage return.
Formula & Calculation Methodology
The geometric mean formula removes annual variance to show the theoretical steady annual rate of return that achieves the terminal asset balance.
Worked Example
Index fund investment growing from $10,000 to $25,000 across 5 full years
Frequently Asked Questions
How does CAGR differ from average annual return?↓
Average annual return is an arithmetic mean that overstates compounding performance during volatile swings. CAGR uses the geometric mean to reflect the true annual rate at which your capital grew.
Does CAGR account for interim deposits or withdrawals?↓
No. Standard CAGR assumes a lump-sum investment with no intermediate capital contributions or disbursements. For portfolios with recurring cash flows, use Time-Weighted Return (TWR) or IRR.
Can CAGR be negative?↓
Yes. If your ending asset value is lower than your initial purchase price, the CAGR will be negative, quantifying the annualized rate of capital depreciation.
Why is CAGR widely used for benchmarking business revenue?↓
Business revenues often fluctuate unevenly year to year. CAGR smooths out episodic surges or lulls, allowing investors to evaluate steady structural trajectory over a multi-year horizon.
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Open calculator →Source Citation & Disclaimer
Informational tool only; not licensed tax, legal, or financial advice.