CAGR & Annualized Return Calculator
Calculate Compound Annual Growth Rate (CAGR), absolute return percentage, total investment multiple, and annualized profit across any multi-year investment period.
Calculated Results
Frequently Asked Questions
What is Compound Annual Growth Rate (CAGR)?
Compound Annual Growth Rate (CAGR) measures the smoothed annual rate of return of an investment over a multi-year time horizon assuming profits are reinvested each year. The mathematical formula is: CAGR = ((Ending Value / Beginning Value)^(1 / Years)) - 1.
How does CAGR differ from average annual return?
Average annual return uses a simple arithmetic mean which overstates volatile returns. For example, if a portfolio gains 100% in Year 1 and loses 50% in Year 2, the arithmetic average is +25% per year, but the true CAGR is exactly 0.0% because your ending balance is identical to your starting capital.
What is a benchmark CAGR for major investment assets?
Historically, the US S&P 500 index has generated an average CAGR of approximately 10.2% before inflation (~7.0% adjusted for inflation) over rolling 30-year windows, while high-yield savings accounts yield 4-5% and long-term US Treasury bonds average 4-6%.
Can CAGR calculate negative growth or capital losses?
Yes. If your investment declined in value, the formula produces a negative CAGR percentage showing the geometric annual loss rate required to reach the ending balance from the initial principal.