CAGR Calculator
Not the average of the yearly returns. Never was.
Work out CAGR. Not the average of the yearly returns. Never was. Names the misconception directly.
Compound annual growth rate
9.60%
6.40% after inflation · 2.5× over 10.0 years
CAGR is the constant annual rate that would take you from the start to the end. It is not the average of the yearly returns, and the gap between the two matters: a portfolio that gains 50% then loses 50% has an average return of zero and a CAGR of −13.4%. That asymmetry is the reason CAGR is the honest measure. A 50% loss needs a 100% gain to recover, so averaging annual percentages systematically flatters volatile investments — and the more volatile, the bigger the flattery. The real figure uses the Fisher relation rather than subtracting inflation, and it is what actually matters over long horizons. At 3% inflation, purchasing power halves in 23 years, which quietly consumes most of a nominal return that looked adequate.
How the CAGR Calculator works
Compound annual growth rate between two values, with the real rate after inflation. CAGR is the constant rate that would produce the outcome — the average of yearly returns is a different and consistently more flattering number.
Also known as: annualised return calculator · what return did i actually get · compound growth rate from two values · average vs compound return
Not financial advice. This calculator is for planning and illustration, not financial advice. Real products carry fees, taxes, and terms it does not model. Confirm figures with your lender or a qualified adviser before committing.
Frequently asked questions
What is CAGR?
The constant annual rate that would take an investment from its starting value to its ending value over the period. It is the honest single-number summary of a return.
Why is CAGR lower than the average annual return?
Because losses need larger gains to recover from. A portfolio that gains 50% then loses 50% has an average return of zero and a CAGR of −13.4% — and only the second reflects what happened to the money.
What is a good CAGR?
Global equities have returned roughly 7 to 10% nominal over long periods, around 5 to 7% after inflation. Anything far above that over a long period deserves scrutiny rather than admiration.
Does CAGR account for contributions?
No. It compares two values and assumes nothing was added or withdrawn. For a portfolio with contributions you need a money-weighted return — an internal rate of return — instead.
Why show the real CAGR?
Because inflation is not a footnote on a long horizon. At 3%, purchasing power halves in 23 years, which quietly consumes most of a nominal return that looked adequate.
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