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Australia CAGR calculator

Work out the compound annual growth rate (CAGR) of an investment — the single smoothed yearly rate that turns your starting value into your ending value — so you can compare investments held over different periods on a level footing.

By Mitch Duncan Last reviewed Methodology

Investment details

CAGR is the constant annual rate that turns the starting value into the ending value over the period. It assumes growth compounds and ignores any deposits or withdrawals in between.

CAGR (annual growth rate)
20.11% / yr
Total return
150.0%
Breakdown
Starting value
$10,000.00
Ending value
$25,000.00
Total gain
$15,000.00
Period
5 years

Growing $10,000.00 into $25,000.00 over 5 years is a compound annual growth rate of 20.11% — the rate that lets you compare investments held for different lengths of time on a level footing.

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ROI calculatorReturn on investmentRead the guideCAGR Explained: Compound Annual Growth Rate
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How CAGR works

The compound annual growth rate answers one question: at what steady yearly rate would your starting amount have to grow to reach the ending amount over the period? The formula is CAGR = (ending / starting)^(1 / years) − 1. Unlike a simple average of yearly returns, CAGR accounts for compounding, so it reflects the real rate that links the two endpoints.

Worked example

An investment grows from $10,000 to $25,000 over 5 years. The total return is 150%, but the CAGR is (25,000 / 10,000)^(1/5) − 1 = 0.201, or about 20.1% a year. "150% over five years" and "20% a year" describe the same result — CAGR just makes it comparable to other investments held for different lengths of time.

Why CAGR beats a simple average

Suppose a fund returns +50% one year and −50% the next. The simple average is 0%, but $100 becomes $150 then $75 — a real loss. CAGR captures this: (75/100)^(1/2) − 1 = −13.4% a year. Whenever returns vary, a simple average overstates performance; CAGR tells the truth.

What CAGR doesn't show

For the maths of compounding behind it, read compound interest explained.

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Frequently asked questions

What is a good CAGR for an investment?
It depends on the asset and the risk taken. Broad stock-market indexes have returned roughly 7–10% a year over the long run before inflation, so a CAGR in that range is solid for a diversified portfolio. Cash and bonds are lower; individual stocks and crypto can be far higher or negative. Always judge CAGR against a relevant benchmark and the risk involved.
What's the difference between CAGR and average annual return?
A simple average adds the yearly returns and divides by the number of years, ignoring compounding. CAGR is the single compounded rate that connects the start and end values, so it reflects what you actually earned. When returns vary year to year, the simple average is always higher than CAGR — and especially misleading after a large loss.
Can CAGR be negative?
Yes. If the ending value is lower than the starting value, CAGR is negative — the steady annual rate of decline. For example, $10,000 falling to $8,000 over 3 years is a CAGR of about −7.2% a year. CAGR can't be calculated if the starting or ending value is zero or negative.

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