The compound annual growth rate is the constant yearly rate that takes a starting value to an ending value over a period, assuming growth compounds each year. It smooths out the ups and downs along the way.

What is the CAGR formula?

CAGR = (ending value ÷ starting value)^(1 ÷ years) − 1. For example, $10,000 growing to $20,000 over 10 years is a CAGR of about 7.18%.

How is CAGR different from average annual return?

The simple average of yearly returns ignores compounding and overstates growth when returns vary. CAGR is the geometric average, which is what actually reproduces the ending value.

Can I use CAGR for part of a year?

Yes. Enter the period as a decimal, for example 2.5 for two and a half years.

Does CAGR include dividends?

Only if the ending value does. Use the total value including reinvested dividends to get a total-return CAGR.

Tools › CAGR calculator

CAGR Calculator

Work out the compound annual growth rate of an investment from its starting value, ending value and holding period.

Compound annual growth rate12.14%

Total return: 150.0%
Growth multiple: 2.50×
Starting value: $10,000
Ending value: $25,000

Growing from $10,000 to $25,000 over 8 years is a compound annual growth rate of 12.14%. The total return is 150.0%, or 2.50 times the starting value.

Formula

CAGR = (ending value ÷ starting value)^{1 ÷ years} − 1

Worked example

Growing from $10,000 to $25,000 over 8 years is a compound annual growth rate of 12.14%. The total return is 150.0%, or 2.50 times the starting value.

This is Step 3 of The MacroInsight Process: the core portfolio. Judge the core portfolio by its compound growth, not its best year.

CAGR Calculator

Formula

Worked example

The market, read before the bell.

Questions