Find the constant compound annual growth rate (CAGR) between two values — and compare it with the simple average per year and total return.
CAGR assumes a constant annual growth rate — it smooths the path, it does not mirror year-by-year volatility. The calculator does not reverse-solve (e.g. “what horizon?”). An optional target ending value is only a comparison with your result (surplus/shortfall), not a mini FV tool. Optional inflation gives real CAGR (Fisher). With mid-period contributions or withdrawals, use IRR.
Enter data and click Calculate.
CAGR (Compound Annual Growth Rate) is the single constant annual rate that takes a starting value to an ending value over time t: CAGR = (End ÷ Start)^(1/t) − 1.
Total return = End ÷ Start − 1 — the percentage change without annualisation.
Simple average per year = total return ÷ t — spreads total growth evenly across years, without compounding. With compound growth the simple average is usually higher than CAGR — the gap shows how much compound annualisation lowers the “average” result.
CAGR smooths the path: two portfolios with the same CAGR may have gone through very different troughs and peaks. With uneven cash flows, check rate of return or IRR instead.
When inflation is enabled, the calculator reports real CAGR via the Fisher effect: (1 + CAGR) = (1 + real CAGR) × (1 + inflation).
An optional target ending value shows surplus or shortfall (ending value − target). The interpretation may also show the CAGR needed to hit the target over the same horizon — a rate comparison only, not a separate solve mode and not a substitute for the FV calculator.
CAGR 8.45%
Total return 50.00%
Simple average 10.00%/y
CAGR − average −1.55%
With compound growth CAGR (8.45%) is lower than the simple average (10%/year) — gap −1.55 pp.
CAGR 12.92%
Total return 20.00%
Simple average 13.33%/y
CAGR − average −0.41%
Short horizon: CAGR is still annualised (≈12.92%/year), simple average ≈13.33%/year.
CAGR 7.18%
Total return 100.00%
Simple average 10.00%/y
CAGR − average −2.82%
Real CAGR 4.06%
After ~3% inflation real CAGR falls to ≈4.05%/year — nominal growth does not fully protect purchasing power.
CAGR ≈8.45%
Total return 50.00%
Shortfall vs target ≈ −1,000
Primary remains CAGR from your inputs. The target only shows the gap — hitting it in 5 years needs a higher CAGR (in the note), without turning this page into FV.
One constant annual rate that takes the start value to the end value over n years — smoothed, annualised growth.
When comparing horizons without material mid-term contributions or withdrawals — then annualisation is clear.
It smooths the path: no drawdowns or spikes. With lumpy cash flows prefer IRR or period-by-period analysis.
A very short window with one big jump, or measuring from a trough to a peak instead of the investment start.
The simple average divides total return by years without compounding. CAGR assumes constant compound growth — with positive growth it is usually lower.
CAGR still annualises the result to a yearly rate — over a few months treat it as a scaled measure, not a long-run expectation.
It only shows surplus/shortfall versus an entered target and optionally the CAGR needed for that target over the same horizon. It does not model contributions, nor solve “how many years?” or “what starting amount?” — use FV for growth with deposits.
