What is CAGR (Compound Annual Growth Rate)?
The Compound Annual Growth Rate (CAGR) is the metric used to measure the mean annual growth rate of an investment over a specified time period longer than one year. It smooths out market volatility to give you a single, standardized percentage representing how fast your money grew.
Why is CAGR Important?
Absolute returns can be misleading. If a stock grows 50% over 5 years, is that good? A 50% absolute return over 5 years is actually an 8.45% CAGR—which underperforms many mutual funds. Our CAGR calculator helps you compare the actual performance of stocks, mutual funds, real estate, and gold on an apples-to-apples basis.
CAGR Formula
CAGR = [(End Value / Beginning Value)^(1 / Years)] - 1