Work out the compound annual growth rate behind any investment or metric. Enter a starting value, ending value and the time between them. The calculator returns the smoothed average yearly growth rate (CAGR), total growth and growth multiple.
CAGR is widely used to compare investment performance, business revenue growth, portfolio returns and KPI trends over time.
Enter starting value, ending value and time to see the CAGR and how quickly your investment or metric is really growing.
CAGR stands for compound annual growth rate. It answers the question:
“If my investment grew at a steady rate each year, what rate would produce the same starting and ending values over this time period?”
CAGR smooths out the bumps of year-to-year volatility and gives you a single number that summarizes the overall growth trend.
The basic formula for CAGR is:
CAGR = (Ending value ÷ Starting value)^(1 ÷ t) − 1 t = time in years between the starting and ending values
For example, if an investment grows from 10,000 to 16,500 over 5 years, then:
CAGR = (16,500 ÷ 10,000)^(1 ÷ 5) − 1
= 1.65^(0.2) − 1
≈ 1.1055 − 1
≈ 0.1055 = 10.55% per year (approx)
This means your investment effectively grew at about 10.55% per year, even if some individual years were higher or lower.
CAGR formulas expect time in years. If you have months, convert them into a fraction of a year. The calculator does this automatically:
t = years + (months ÷ 12)
That way, a period of 3 years and 6 months becomes 3.5 years in the calculation.
A common mistake is to just average yearly returns. This can be misleading, especially when returns are volatile.
That’s why professionals use CAGR as a cleaner way to compare different investments or growth trends.
| Use case | What grows | Why CAGR helps |
|---|---|---|
| Investment performance | Portfolio value | Summarizes uneven yearly returns as a single annual rate. |
| Business KPIs | Revenue, profit, users | Shows long-term trend without being distracted by short-term noise. |
| Start-up growth | MRR, ARR, active users | Makes it easy to benchmark against targets and peers. |
| Market size | Industry revenue over time | Summarizes multi-year expansion as an annual growth rate. |
| Personal goals | Net worth, savings, income | Shows how quickly you’re progressing towards financial goals. |
CAGR is designed for positive starting and ending values. If either value is negative, the standard formula breaks down or produces complex numbers. In those cases, consider using a different measure or transforming the data.
A negative CAGR simply means the ending value is lower than the starting value. For example, a −5% CAGR over 3 years means the value shrank, on average, by about 5% per year.
No. CAGR assumes a single initial value and a single ending value with no cash flows in between. IRR (internal rate of return) handles multiple inflows and outflows over time and is more suitable for detailed project or investment analysis.
The longer the time period, the more stable and meaningful the CAGR becomes. A one-year “CAGR” is just the one-year return; multi-year periods give a more useful long-term growth view.