CAGR Calculator
Calculate the compound annual growth rate of your investments or trading account to measure annualized performance over time.
Free — no signup, no ads, instant results
Inputs
Results
CAGR
20.11%
Total Return
150.00%
Absolute Gain/Loss
+$15,000.00
Who Is This For?
Traders and investors who want to measure the annualized return of their portfolio or trading account over any time period. Useful for comparing performance across different timeframes.
Understanding CAGR
Compound Annual Growth Rate (CAGR) measures the mean annual growth rate of an investment over a specified period longer than one year. It smooths out the volatility of year-to-year returns into a single, easy-to-compare percentage.
CAGR is especially useful for comparing the performance of different trading strategies, portfolios, or investments over different time periods. Unlike simple averages, CAGR accounts for the compounding effect, giving you a more accurate picture of real growth.
Use CAGR alongside our compound interest calculator to project future returns, or track your growth in a trading journal. Pair your analysis with GrandAlgo indicators to improve the growth rate of your trading account over time.
The CAGR Formula
The formula for compound annual growth rate is: CAGR = (Ending Value / Beginning Value)^(1/Years) - 1
Example: Your account grows from $10,000 to $25,000 over 3 years. CAGR = (25000/10000)^(1/3) - 1 = 35.7% per year
CAGR smooths out volatility — your actual yearly returns might be +80%, -20%, +60%, but CAGR shows the equivalent steady annual growth rate.
CAGR vs Simple Average Return
Simple average: Add all yearly returns and divide by the number of years. If returns are +40%, -10%, +30%, the simple average = 20%.
CAGR: Accounts for compounding. Same returns on $10,000: Year 1 = $14,000, Year 2 = $12,600, Year 3 = $16,380. CAGR = 17.9%
CAGR is always lower than the simple average when returns vary (this is called volatility drag). Use CAGR for honest performance measurement — simple average inflates results.
Worked Example
Starting value: $10,000
Ending value: $18,500
Time period: 3 years
CAGR: (18500/10000)^(1/3) - 1 = 22.8% per year
Interpretation: Your money grew at 22.8% annually, compounded
Assumptions & Edge Cases
- Assumes no deposits or withdrawals during the period — only measures investment growth.
- CAGR smooths out volatility and does not reflect actual year-by-year returns.
- Not suitable for periods shorter than 1 year.
Frequently Asked Questions
CAGR (Compound Annual Growth Rate) measures the mean annual growth rate of an investment over a period longer than one year, assuming profits are reinvested. It smooths out the volatility of individual years into a single annual rate, making it the standard metric for comparing investment and trading performance across different time periods.
A CAGR of 20-30% is considered excellent for active traders. For context, the S&P 500’s long-term CAGR is approximately 10%. Hedge funds typically target 15-25%. Anything above 50% CAGR sustained over multiple years is exceptionally rare and usually involves significant risk.
Total return tells you the overall percentage gain (e.g., “my account doubled — 100% return”). CAGR tells you the annualized rate that would produce that same result through steady compounding. A 100% total return over 5 years is a CAGR of 14.9% — much less impressive than it sounds as a headline number. CAGR is the honest metric.