Find the compound annual growth rate (CAGR) of an investment — the average return per year — from the initial value, final value and period.
Enter your data
Enter the amount invested, the final value and the period. See the profit, total ROI and annualized return (CAGR).
ROI is the total return over the whole period, and CAGR is the annualized average return (accounting for compounding). It excludes inflation and taxes.
Total return (ROI) +50% · Annualized return (CAGR) +14.47% · Profit 500 RONStandard financial formulas (time value of money). Instant in-browser calculation, no account, no data sent. Interest rates are indicative — check the bank’s actual offer.
CAGR is the constant yearly growth rate that takes the initial value to the final value over the given number of years:
From 1,000 to 1,500 in 3 years: CAGR = (1.5)^(1/3) − 1 ≈ 14.5% per year, even though the total return (ROI) is 50%.
CAGR (compound annual growth rate) is the average yearly return of an investment, assuming steady growth and the reinvestment of gains from one year to the next.
CAGR = (final value ÷ initial value)^(1 ÷ years) − 1. For example, from 1,000 to 1,500 in 3 years: (1.5)^(1/3) − 1 ≈ 14.5% per year.
A simple average adds the yearly returns and divides, ignoring compounding. CAGR is the geometric mean and correctly reflects real growth, accounting for compounding.
Because it normalizes the return per year. Two investments with the same total ROI but different durations have different CAGR — the one that gets there faster is better.
As a benchmark, major stock markets have historically returned a CAGR of about 7–10% a year over the long term. A CAGR above inflation means real growth in purchasing power.
No. CAGR uses only the start and end values, so it smooths out fluctuations. A volatile and a stable investment can have the same CAGR with very different risk.
With caution. CAGR describes the past; future returns are not guaranteed. It is useful for estimates, but do not assume a high CAGR will repeat indefinitely.
CAGR is exactly the compound interest rate that would turn the initial value into the final value over the given period. It is effectively the investment’s implied interest rate.