CAGR Calculator
Compound Annual Growth Rate
Inputs
Result
Absolute return
CAGR
CAGR is the constant annual rate at which the initial investment would have to grow, compounded yearly, to reach the final value over the given period.
The formula
CAGR = (Final / Initial)1/n − 1
Where n = number of years. CAGR smooths year-on-year volatility into a single growth rate, making investments with different return patterns directly comparable. It does not reflect interim volatility — a 12% CAGR investment may have swung +40% / −20% during its lifetime.
When CAGR misleads
For periods under a year, CAGR is meaningless — annualising a 3-month return assumes the same growth continues for 9 more months, which often doesn't hold. Use absolute return for sub-1Y periods.