CAGR
calculator
Went from $10,000 to $25,000 in 7 years, but what was the yearly rate? CAGR is the honest average: the single steady rate that would have produced the same journey, compounding included.
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The honest average
CAGR, compound annual growth rate, is the one steady yearly rate that would carry a starting value to an ending value over a given period, with growth compounding on growth. It's the standard way to compare investments over different timespans.
Worked example
CAGR ≈ +14.0% a year
Why not just divide by years?
Dividing total growth by years ignores compounding and overstates the rate: 150% over 7 years is not 21.4% a year, it's 14%. The gap widens with time and with volatility, which is why CAGR is the number professionals quote. To run it forward instead of backward, the compound interest calculator is the mirror image, and the rule of 72 is the mental shortcut.
CAGR FAQ
Compound annual growth rate, the single steady yearly rate that would grow a starting value to an ending value over a period, with compounding. It's the standard like-for-like growth measure in finance.
Divide the ending value by the starting value, raise the result to one over the number of years, then subtract one. For $10,000 to $25,000 in 7 years: 2.5^(1/7) − 1 ≈ 14% a year.
Because compounding does part of the work each year. Averaging total growth over years ignores that and overstates the rate, the classic beginner mistake this calculator shows side by side.
Yes. If the ending value is below the start, CAGR is negative, the steady yearly decline that matches the loss.