What is the difference between CAGR and average return?

Average return can mislead with volatile data. A 50% gain then 50% loss averages to 0% but actually loses 25%. CAGR uses geometric mean and correctly reflects compounded outcomes.

CAGR Calculator & Growth Rate Tool

Q: What is a good CAGR for stocks?

Long-term: US S&P 500 ~10% CAGR, MSCI World 7-8%, emerging markets 7-10%. Sustainably above 12% is exceptional.

Q: Can CAGR be negative?

Yes - if final value is below starting value, CAGR is negative. A -5% CAGR over 10 years means about 40% total loss.

Currency

Initial Value

Final Value

Number of Years

Or — find Future Value using CAGR

CAGR (%)

About the CAGR Calculator

The Compound Annual Growth Rate (CAGR) Calculator measures the steady annual rate at which an investment or business metric would have had to grow to reach its ending value from its beginning value over a given period — smoothing out the year-to-year volatility into a single comparable figure. It is widely used by investors to compare mutual funds, stocks, and portfolios on an equal footing, and by businesses to benchmark revenue or profit growth. Unlike simple average returns, CAGR accounts for compounding and gives a more accurate picture of true performance.

How to Use

Enter the initial value (purchase price, starting portfolio value, or beginning revenue).
Enter the final value (current price, ending portfolio value, or latest revenue).
Enter the number of years between the two values and click Calculate.
Optionally enter a CAGR % and click "Find Future Value" to project where an investment could reach.

Formula Used

CAGR = (Ending Value / Beginning Value)^(1/n) − 1

Ending Value = final amount, Beginning Value = initial amount, n = number of years. The inverse — projecting a future value — uses FV = Beginning Value × (1 + CAGR)^n.

Understanding Your Results

CAGR % The annualised compounded growth rate — use this to compare investments held for different durations on a like-for-like basis.

Absolute Return % The total percentage gain over the entire period without annualisation — useful for understanding the raw magnitude of growth.

Multiplier How many times your initial investment has grown — a multiplier of 3× means your money tripled over the period.

Frequently Asked Questions

What is CAGR and why does it matter?

Compound Annual Growth Rate is the constant annual rate at which an investment would have grown if returns had been smooth. It strips out volatility and gives one apples-to-apples number to compare investments over different time periods.

What is the difference between CAGR and average annual return?

A simple average can be misleading. If an investment gains 50% then loses 50%, the average return is 0% but the actual outcome is a 25% loss. CAGR (a geometric mean) correctly reports this as roughly −13.4%/year — that's why CAGR is the right metric for multi-year compounding.

What is a good CAGR for stocks?

Long-term global equity CAGRs: US S&P 500 ~10%, MSCI World ~7–8%, emerging markets ~7–10%. Anything sustainably above 12% is exceptional. Always compare against an appropriate benchmark, not in isolation.

Can CAGR be negative?

Yes — if your final value is below the starting value, CAGR is negative. A −5% CAGR over 10 years means the investment lost about 40% in total. Always look at CAGR alongside maximum drawdown and volatility to understand the risk taken.

Important Note

CAGR is a backward-looking metric — it tells you what happened, not what will happen. It assumes smooth, steady compounding and masks interim volatility. Always review the full return history, risk metrics, and qualitative factors before drawing investment conclusions from CAGR alone.

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