Find the steady yearly growth rate between two values, or project an end value from a growth rate. Add yearly returns to see why the average return overstates real growth.
Estimates for planning, not financial, tax or legal advice. Figures use US rules unless the page says otherwise.
The CAGR formula
CAGR = (end value ÷ start value)1 ÷ years − 1
CAGR is the single yearly rate that, compounded, takes the start value to the end value. To go the other way: end value = start value × (1 + CAGR)years.
$10,000 that grows to $20,000 in 5 years: (20,000 ÷ 10,000)1/5 − 1 = 20.2 − 1 = 14.87% a year. The value doubled, but the yearly rate is well under 20%, because each year's growth builds on the last.
CAGR vs average return
The plain (arithmetic) average of yearly returns overstates how fast money really grew whenever returns go up and down. CAGR is the geometric average, and it's the one that matches your actual balance:
Arithmetic = (r₁ + r₂ + … + rₙ) ÷ n Geometric = ((1 + r₁)(1 + r₂)…(1 + rₙ))1/n − 1
Returns of +50% then −50% average 0%, yet $100 becomes $150 and then $75: a CAGR of −13.4% a year. Returns of +10%, −20% and +30% average 6.67%, but the money grew only 4.59% a year. The bigger the swings, the bigger the gap.
Limitations
- CAGR smooths the path. It says nothing about how bumpy the ride was.
- It only uses the first and last values. Money added or withdrawn in between distorts it; use the IRR calculator for that.
- The start value must be above zero. A negative start (like a loss turning into a profit) has no meaningful CAGR.
Sources
How we checked this
Before every update, this calculator is run in a real browser with these known answers, and it must match all of them:
- $10,000 to $20,000 in 5 years: CAGR 14.87% ✓
- $20,000 to $10,000 in 5 years: CAGR −12.94% ✓
- $10,000 at 7% CAGR for 10 years = $19,671.51 ✓
- Returns +10%, −20%, +30%: geometric 4.59% vs average 6.67% ✓
- +50% then −50% averages 0% but compounds to −13.4% a year ✓
Last checked October 26, 2026. Spotted something wrong? The math is done in your browser with the formula shown on this page, so you can check any result by hand.
Questions people ask
How do I calculate CAGR?
Divide the end value by the start value, raise the result to the power of 1 ÷ years, and subtract 1. $50,000 to $80,000 in 4 years: 1.6 to the power 0.25, minus 1 = 12.47% a year.
Why is CAGR lower than the average return?
Losses hurt more than equal gains help: after a 50% loss you need a 100% gain to get back. CAGR captures this; the simple average doesn't.
Can CAGR be negative?
Yes, when the end value is below the start value. $20,000 falling to $10,000 over 5 years is a CAGR of −12.94%.
Is CAGR the same as annualized return?
Yes. Funds report "average annual total return" using the same formula, as required by the SEC for mutual fund ads and prospectuses.