How is CAGR worked out?

Divide the ending value by the starting value, raise the result to the power of one over the number of years, then subtract one. Growing from 1,000 to 1,500 over 5 years is a CAGR of about 8.45% a year.

Is CAGR the same as average yearly return?

No. A simple average of yearly returns ignores compounding and can overstate growth. CAGR is the single steady rate that gives the same end result.

CAGR calculator

Work out the compound annual growth rate between any two values: the steady yearly rate that turns a starting amount into an ending amount, with an optional figure after inflation. Free, no sign-up, nothing leaves your browser.

Starting valueEnding value

Years between themYearly inflation (%, optional)

Use any currency or unit, as long as both values use the same one. Part years work too, such as 2.5.

Compound annual growth rate

8.45%

a year, every year, for 5 years

Total change

50.00%

Gain or loss

500.00

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What CAGR means

The compound annual growth rate, or CAGR, is the steady yearly rate that would turn a starting value into an ending value over a number of years, with growth added on top of growth each year. It smooths out the ups and downs, so two very different journeys can have the same CAGR.

Using it fairly

CAGR is handy for comparing growth over different periods, such as a savings pot, a business's sales or an asset's price. It hides how bumpy the ride was, and past growth says nothing certain about the future. Taking inflation off shows whether the growth beat rising prices.

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