CAGR / Average Return Calculator
Compound Annual Growth Rate: the steady annual return that would take a starting value to an ending value over n years.
Inputs
How it works
CAGR = (End/Start)^(1/years) − 1. It's the constant annual rate that produces the same ending value.
Frequently asked questions
Why not just use total return?
Total return doesn't say how fast. A 50% gain over 2 years vs 10 years are completely different investments.
Is CAGR the same as annualized return?
Yes — for a single lump sum, CAGR = annualized return. For irregular cash flows, use money-weighted return (IRR) or time-weighted return.
Does CAGR account for volatility?
No — CAGR is a smoothed number. A fund with 30% then -20% has the same CAGR as one that returned 3.9% both years, but very different risk.
How does CAGR compare with simple average?
CAGR is always ≤ simple average when returns are volatile. The gap is called 'volatility drag'.
Can CAGR be negative?
Yes — if the ending value is below the starting value.