How it works
Compound annual growth rate is the steady yearly rate that would take a value from its starting point to its ending point over the period, if growth had compounded evenly every year.
Real growth is rarely smooth, so CAGR is a summary, not a description of any single year. It is widely used to compare investment returns, revenue growth and other metrics over different time spans.
Formula
CAGR = (ending value ÷ beginning value)^(1 / years) − 1
Questions people ask
How is CAGR different from average annual return?
A simple average of yearly returns overstates growth when returns vary. For example, +50% then −50% averages 0% but leaves you with 75% of your money; CAGR correctly shows about −13.4% a year.
Can CAGR be negative?
Yes. If the ending value is lower than the beginning value, CAGR is negative.
Can I use partial years?
Yes. Enter fractional years, such as 2.5 for two and a half years.