CAGR calculator: Find your average annual return
An investment has grown from 50,000 to 100,000. The total return is 100%, but the number does not tell you whether the doubling took five or twenty years. CAGR converts the development into an average annual growth rate.
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Worked example
- Start value: 100,000.00 USD
- End value: 200,000.00 USD
- Number of years: 10 years
Result
Annual return (CAGR)
7.1773 %
Total return
100 %
Working
- CAGR = 100 × ((S / K)^(1/n) − 1)
100 × ((200,000.00 USD / 100,000.00 USD)^(1/10) − 1) = 7.1773 % - total return = 100 × (S − K) / K
100 × (200,000.00 USD − 100,000.00 USD) / 100,000.00 USD = 100 %
Enter the start value, end value and number of years. The calculator shows both the total return and the annual percentage that links the two values.
The CAGR formula
CAGR = (end value/start value)^(1/number of years) − 1. The result is multiplied by 100 to get a percentage.
CAGR takes compounding into account. It is the fixed annual growth that would give the same end value. It does not say that the investment actually grew evenly along the way.
Doubling over ten years
If 50,000 grows to 100,000 over ten years, the CAGR is about 7.18%. It is not 10%, even though spreading the total return of 100% evenly over ten years gives ten percentage points a year.
The difference is because the return also grows along in the calculation.
When can you compare with CAGR?
The calculation is useful for comparing growth in value over different periods. The start and end values must be measured the same way, for example both including reinvested dividends or both without dividends.
If you have paid in or withdrawn money along the way, the balances alone cannot be used to calculate your investment return. An extra deposit is not a price gain, after all.
Two investments can also have the same CAGR and very different price swings.