Compute the compound annual growth rate of an investment or business metric from start value, end value and years.
| Input | Result |
|---|---|
| $10,000 → $16,000 in 3 yrs | +16.96% per year |
| $5,000 → $20,000 in 10 yrs | +14.87% per year |
| $100,000 → $180,000 in 7 yrs | +8.76% per year |
Total return ignores time. Doubling your money is great over 5 years (14.9% CAGR) but poor over 25 years (2.8% CAGR). CAGR puts every investment on the same per-year scale.
Yes, it smooths the ride completely. An investment that fell 50% then tripled has the same CAGR as steady growth. Pair it with volatility or a maximum-drawdown figure for the full picture.
No. The arithmetic average overstates growth when returns vary. CAGR is the geometric average, the rate that actually compounds to the result, and is always equal to or lower than the arithmetic average.
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