CAGR Calculator

CAGR is the smoothed annual rate at which an investment grows if it compounded at exactly the same rate every year. Total return is the raw percentage change from start to finish, with no regard for how long it took. A $10,000 investment that grows to $20,000 shows a 100% total return, but its CAGR over 10 years is about 7.18% per year.

The S&P 500 has returned roughly 10% nominal CAGR since 1926, or about 7% after inflation. Consistently beating 10% CAGR over a decade or more is considered strong performance. A CAGR below 5% typically underperforms broad equity index funds, though lower returns may be acceptable for bonds or other lower-risk assets.

Simple averages ignore the compounding effect and overstate performance when returns vary widely year to year. A portfolio that gains 50% one year and loses 50% the next has a 0% average return, but its CAGR is about -13.4%, because you actually end up with only 75% of what you started with.

Yes. When the ending value is lower than the beginning value, the calculator returns a negative CAGR, which represents the average annual rate of decline. Both values must be greater than zero for the formula to work.

Only if you build them into the values you enter. The formula uses just your beginning and ending values, so reinvested dividends are included only if your ending value already reflects them. For regular contributions over time, a compound interest calculator that accepts periodic additions gives a more accurate picture.