CAGR / Annualized Return Calculator
Calculate the compound annual growth rate (CAGR), also known as your annualized return. Enter your starting value, ending value, and time period to find your long-term growth rate.
Use decimals for partial years (e.g. 1.5 for 18 months)
This calculator assumes no additional deposits or withdrawals during the period.
Enter your starting value, ending value, and time period, then click Calculate CAGR to see your compound annual growth rate and total return.
For educational purposes only. Not financial advice. Read full disclaimer
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CAGR Formula (Compound Annual Growth Rate)
CAGR = (Ending / Starting)^(1 / Years) - 1
Total Return = (Ending / Starting) - 1
Growth Multiple = Ending / Starting
Worked Examples
Example 1: Portfolio Growing from $10,000 to $25,000 Over 5 Years
An investor starts with $10,000 and their portfolio grows to $25,000 over 5 years. What is the annualized return?
- Growth multiple = $25,000 / $10,000 = 2.5×
- CAGR = 2.5^(1/5) − 1 = 20.11% per year
- Total return = ($25,000 − $10,000) / $10,000 = 150%
- Interpretation: The portfolio compounded at roughly 20% annually to produce a 150% total gain.
Example 2: Portfolio Declining from $50,000 to $42,000 Over 2 Years
A trader's account drops from $50,000 to $42,000 over 2 years. The CAGR shows the annualized loss rate.
- Growth multiple = $42,000 / $50,000 = 0.84×
- CAGR = 0.84^(1/2) − 1 = −8.35% per year
- Total return = ($42,000 − $50,000) / $50,000 = −16%
- Interpretation: The portfolio lost about 8.35% per year on a compounded basis over the two-year period.
How to Use This Calculator
- Enter your starting value — the initial portfolio or investment value at the beginning of the period.
- Enter your ending value — the final portfolio value at the end of the period.
- Enter the time period in years — use decimals for partial years (e.g., 2.5 for two and a half years).
- Click Calculate — the calculator returns your CAGR (annualized return), total return percentage, and growth multiple.
Frequently Asked Questions
- What is CAGR?
- CAGR (Compound Annual Growth Rate) is the rate at which an investment would have grown if it compounded at a steady rate each year. It smooths out year-to-year volatility to give a single comparable annual figure.
- How is CAGR different from average return?
- A simple average adds up annual returns and divides by years, which can be misleading when returns vary widely. CAGR uses the actual start and end values to compute the true geometric rate of growth, making it a more accurate measure of real performance.
- Can CAGR be negative?
- Yes. If your ending value is lower than your starting value, the growth multiple is less than 1, and the CAGR will be a negative percentage — representing the annualized rate of loss.
- What's a good CAGR for a stock portfolio?
- The S&P 500 has historically averaged roughly 10% CAGR before inflation. A long-term CAGR above 15% is considered strong for active traders or investors; anything above 20% is exceptional and difficult to sustain over many years.
- Why use CAGR instead of total return?
- Total return doesn't account for how long the investment was held. A 100% total return over 10 years is far less impressive than 100% over 2 years. CAGR normalizes for time, making it easy to compare strategies or managers across different holding periods.