CAGR Calculator 2026

CAGR (Compound Annual Growth Rate) tells you the average yearly return of an investment over a period of time, assuming returns are reinvested. Enter your starting value, ending value, and number of years — it gives you the single annual rate that would produce that result. It flattens out the ups and downs so you can compare investments side by side, regardless of how volatile each one was.

Absolute return is the total gain: 'My investment grew 50% over 5 years.' CAGR is the annualized rate: that same 50% over 5 years = ~8.45% CAGR. A 50% return over 3 years (14.5% CAGR) is much better than 50% over 10 years (4.1% CAGR). When comparing investments held for different lengths of time, CAGR is the number that matters — absolute return ignores time entirely.

The number is mathematically correct. What it hides is everything else. Two investments can both have 10% CAGR — one could be a smooth government bond, the other a tech stock that dropped 40% then recovered. CAGR alone tells you nothing about risk, volatility, or how the investment actually behaved year to year. Use it for comparison, not as your only metric.

XIRR handles multiple cash flows — irregular investments and withdrawals. CAGR assumes a single lump-sum investment with no additions or redemptions. If you invest monthly via a recurring investment plan, CAGR will give you a misleading number; XIRR is the correct metric. Use CAGR for one-time investments. Use XIRR when you add or withdraw money at different times.

CAGR doesn't show you: volatility (how bumpy the ride was), the order of returns (when the bad years happened), the impact of adding or withdrawing money mid-way, or what happens next. It can be manipulated by picking favorable start and end dates. Always pair CAGR with other measures — such as maximum drawdown and standard deviation — and look at what actually happened in the middle years, not just the endpoints.