CAGR Calculator
CAGR is the single annual rate that would turn your beginning value into your ending value if it compounded smoothly every year. It's the honest way to compare investments over different time spans — and to see past a big-sounding headline return that actually took many years to earn.
CAGR smooths a bumpy path into one number: it says nothing about the drawdowns along the way or the order the returns arrived in. Two investments with the same CAGR can feel completely different to live through — and none of it predicts the future.
- • CAGR = (ending ÷ beginning)1 ÷ years − 1. The rate that compounds the start into the end.
- • Total return = ending ÷ beginning − 1. The whole-period gain or loss, ignoring how long it took.
- • Growth multiple = ending ÷ beginning. How many times your money you ended with.
Worked example: $10,000 grows to $20,000 over 5 years. That's a 100% total return, but a CAGR of just 21/5 − 1 = 14.87% / year — the doubling was spread across five years, not earned in one.
CAGR hides the path: the drawdowns, the volatility, and the order returns arrived in. A smooth 15%/yr and a wild ride that averaged 15%/yr have the same CAGR and feel nothing alike. It describes the past, never the future. Educational tool, not advice.
A calculator shows what a rule should do on paper. Whether a strategy actually beats simply buying and holding — costs on, losses shown, no hindsight — is a different question, and the only one that pays. Most rules don't beat holding; the backtest is how you find the rare few that do — so when you build one that survives, you'll know it isn't a fake edge, then prove it forward before you risk real money. It won't tell you you'll win — nothing honest can.