CAGR is the smoothed yearly growth rate that takes a value from start to end — the standard way to compare investments.
How the CAGR Calculator works
CAGR = (ending ÷ beginning)^(1 ÷ years) − 1. It's the smoothed annual growth rate from start to end value.
Example calculation
Growing $10,000 to $25,000 over 5 years is a CAGR of about 20.1%.
Tips for using the CAGR Calculator
- CAGR removes year-to-year noise.
- Use it to compare investments over equal periods.
- It hides volatility — combine with risk metrics.
CAGR Calculator — frequently asked questions
- Why use CAGR?
- It removes volatility noise and expresses growth as one consistent annual rate.
- Does it show risk?
- No — CAGR ignores year-to-year swings, so pair it with a volatility measure.
- Why use CAGR instead of average return?
- Averages overstate growth; CAGR reflects actual compounded performance.
- Does CAGR show risk?
- No — it ignores the path taken, so volatility is invisible.
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