CAGR Calculator
Find the compound annual growth rate between two values, and see why it differs from the average yearly return.
Your details
Adjustment
Money you paid in beyond the starting value. CAGR overstates performance if you ignore it.
This calculator runs entirely on your device. Nothing you enter is uploaded, stored, or sold. How this works
CAGR
13.32%
2.40× over 7.0 years
Includes your inputs, the full breakdown, and every row of the table.
Total return
140.0%
Simple average per year
20.00%
Growth multiple
2.40×
Doubling time at this rate
5.5 years
- Starting value
- $10,000
- Ending value
- $24,000
- Gain
- $14,000
- Period
- 7.0 years
- CAGR
- 13.32%
| Year | Value | Gain | Cumulative |
|---|---|---|---|
| Year 1 | $11,332 | $1,332 | 13.3% |
| Year 2 | $12,842 | $2,842 | 28.4% |
| Year 3 | $14,553 | $4,553 | 45.5% |
| Year 4 | $16,492 | $6,492 | 64.9% |
| Year 5 | $18,689 | $8,689 | 86.9% |
| Year 6 | $21,179 | $11,179 | 111.8% |
| Year 7 | $24,000 | $14,000 | 140.0% |
What this means
- The simple average of 20.00% is higher than the CAGR of 13.32%. Averaging annual returns always flatters performance because it ignores compounding against a variable base.
- CAGR describes the constant rate that would produce the same result. It says nothing about the volatility along the way.
How the cagr calculation works
Compound annual growth rate answers a deliberately narrow question: if this investment had grown at exactly the same rate every year, what would that rate have been? It smooths away every peak and crash between the two endpoints, which makes it excellent for comparing investments over identical periods and misleading if you mistake it for a description of the journey.
The reason CAGR is preferred over averaging annual returns is that averages ignore the base effect. An investment that gains fifty percent and then loses fifty percent has an average return of zero but has actually lost a quarter of its value, because the loss applies to a larger balance than the gain did. CAGR captures this correctly and is always lower than or equal to the arithmetic mean — the gap between them widens as volatility increases.
Frequently asked questions
Why is CAGR lower than the average of my yearly returns?
Because losses hurt more than equivalent gains help. Up 50% then down 50% averages to zero but leaves you down 25%, since the decline applies to a bigger balance. CAGR reflects what actually happened to your money; the arithmetic average does not, and the discrepancy grows with volatility.
Can I use CAGR if I kept adding money?
Not meaningfully. CAGR assumes a single lump sum left alone, so contributions get counted as investment growth and inflate the figure. When money moves in or out, you need a money-weighted return such as IRR, or you will substantially overstate how well the investment performed.
What CAGR should I expect from the stock market?
Broad equity indices have historically produced roughly seven to ten percent annually over long periods before inflation, depending heavily on the window measured. Any specific number is an artifact of its start and end dates, which is precisely the weakness of the measure — pick different endpoints and the story changes.
Related calculators
Compound Interest Calculator
See what regular contributions plus compound growth turn into over time — and how much of the total is growth rather than deposits.
InvestingInvestment Return Calculator
Turn a starting and ending value into total return, annualised return (CAGR), and a comparison against a benchmark.
InvestingRule of 72 Calculator
Estimate how long money takes to double at a given return — and check the shortcut against the exact maths.
InvestingInflation Calculator
See what your money will actually be worth later, and what you would need to keep the same standard of living.
InvestingSpotted a problem, or want this calculator to do more?Corrections are fixed first, and the most-requested features get built next.Tell us →
Disclaimer. This calculator is provided for general information and educational purposes only and does not constitute financial, tax, legal, medical, or engineering advice. Results are estimates based on the inputs you provide and the assumptions described above. Confirm any figure with a qualified professional before acting on it.