CAGR (Compound Annual Growth Rate)
The steady annual rate that would grow an investment from its starting value to its ending value over a period.
What does cagr mean?
CAGR smooths an uneven investment journey into one annualized rate, making it easy to compare investments held for different lengths of time. It describes the average, not the actual year-to-year path.
Put it to use
Annual Rate of Return Calculator Use this calculator to determine the annual return of a known initial amount, a stream of deposits, plus a known final future value. Lump Sum Annual Return Calculator Use this calculator to determine the annual rate of return of known lump sum starting and ending amount.
Related terms
CAGR — frequently asked
How do I calculate CAGR?
CAGR = (ending value ÷ beginning value)^(1 ÷ years) − 1. Growing $10,000 to $20,000 over 7 years is a CAGR of about 10.4%. It is the steady annual rate that would produce the same result.
How is CAGR different from average return?
A simple average ignores compounding and can overstate results; CAGR is the true annualized growth that accounts for it. A portfolio up 100% then down 50% has a 25% average but a 0% CAGR — CAGR reflects what you actually kept.