How it's calculated
CAGR = (Ending value / Starting value)^(1 / years) − 1
Total return = Ending value / Starting value − 1
With dates: years = (days between the dates) / 365 (same convention as Excel's XIRR)
- CAGR is the steady yearly rate that would turn the starting value into the ending value. The real path almost certainly went up and down; CAGR smooths it out.
- No deposits or withdrawals. If you added or removed money along the way, CAGR on the account balance overstates or understates your return. That needs a money-weighted return (IRR/XIRR), which this calculator does not compute.
- For periods shorter than a year, the annualized rate can look extreme (a 10% gain in one month annualizes to over 200%). It's shown, but be careful interpreting it.
Worked examples
1. $10,000 to $25,000 in 8 years
CAGR = (25,000 ÷ 10,000)1/8 − 1 = 2.50.125 − 1 = 12.135% a year. Check: 10,000 × 1.121358 = $25,000.00. The total return was 150%. Load this example
2. A loss: $10,000 to $5,000 in 3 years
CAGR = 0.51/3 − 1 = -20.63% a year. Note the asymmetry: after a 50% loss you need a 100% gain to get back to even. Load this example
3. Using dates
$50,000 on March 15, 2019 to $82,000 on March 15, 2026 is 2,557 days = 7.0055 years (two leap days included), so CAGR = 1.641/7.0055 − 1 = 7.317%. Load this example
Frequently asked questions
How do you calculate CAGR?
Divide the ending value by the starting value, raise the result to the power of 1 divided by the number of years, and subtract 1. Example: $10,000 to $25,000 over 8 years is 2.5^(1/8) − 1 = 12.14% a year.
What is the difference between CAGR and average annual return?
The simple average of yearly returns ignores compounding and is usually higher than CAGR. Returns of +50% and −50% average 0%, but $100 becomes $75, a CAGR of −13.4%. CAGR is the rate that actually connects the start and end values.
Can I calculate CAGR with monthly or irregular contributions?
Not with this formula. CAGR assumes a single starting amount with nothing added or withdrawn. With contributions you need a money-weighted return (IRR or XIRR), which a future InvestorMath calculator may cover.
How do I annualize a total return?
Enter 100 as the starting value and 100 plus your total return as the ending value. For example, a 60% total return over 5 years: start 100, end 160, 5 years gives 9.86% a year.
How are partial years handled?
You can enter fractional years (like 2.5) or two dates. With dates, years = days ÷ 365, which matches how Excel's XIRR function counts time.