CAGR Calculator
Compute the compound annual growth rate that turns a starting capital into an ending capital over a period.
Quick answer: The compound annual growth rate is the single yearly rate that, compounded each year, grows the starting capital into the ending capital over the given number of years. It smooths away the bumps of individual years into one representative rate. The tool raises the ratio of ending to starting capital to the power of one over the years and subtracts one.
How to use it
Enter the capital you started with, the capital you finished with, and the number of years between them. The output is the compound annual growth rate as a percentage, plus the total growth over the whole period. CAGR assumes smooth compounding and says nothing about the volatility or drawdowns along the way.
Formula
CAGR = ( Ending ÷ Starting ) ^ ( 1 ÷ Years ) − 1
Multiply by 100 to express as a percentage. Years may be fractional.
Limitations — what this calculator does not model
- Depends only on the two endpoints, so it hides all volatility and drawdown between them.
- Assumes a single lump sum with no deposits or withdrawals; for a funded account use a money- or time-weighted return instead.
- Is highly sensitive to the start and end dates over short periods, where recent luck dominates.
- Says nothing about risk — always read it alongside a drawdown or volatility measure.
Frequently asked questions
How is CAGR different from average return?
A simple average of yearly returns overstates growth because it ignores compounding and the fact that a loss needs a larger gain to recover. CAGR is the geometric rate that actually links start to end, so it is the honest smoothed figure.
Does CAGR show risk?
No. Two accounts can share the same CAGR while one rose steadily and the other swung through deep drawdowns. Always read CAGR alongside a drawdown or volatility measure on the same dashboard.
How do I compute a live CAGR when I keep depositing or withdrawing?
Plain CAGR assumes a single lump sum with no external cash flows, so for a funded live account use a money-weighted or time-weighted return instead — otherwise deposits are silently counted as performance. This is the usual reason a naive live CAGR looks better than the strategy actually is.
Can CAGR be negative?
Yes. If the ending capital is below the starting capital, the growth rate is negative, reflecting a compounded annual loss over the period — a state a monitoring system should surface immediately.
Why is a live CAGR so sensitive to the current date?
Because CAGR depends only on the endpoints, a single strong or weak recent stretch can noticeably move it, especially over short live periods. Reporting it over several rolling windows shows how much is date luck rather than durable growth.
Should a running system act on its live CAGR?
Only as one input among several. CAGR is an outcome, not a control; allocation and de-risking decisions should lean on risk-adjusted and drawdown measures, with CAGR read alongside them so a high figure earned through deep drawdowns is not mistaken for health.
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