How is CAGR calculated?

CAGR is calculated as ending value divided by starting value, raised to the power of one divided by number of years, minus one. Multiply by 100 to express as a percentage.

What is the difference between CAGR and average return?

The arithmetic average sums the annual returns and divides by the number of years. CAGR finds the smooth growth rate that produces the same ending value. When returns vary, CAGR is always lower than the arithmetic average.

What is a realistic CAGR for equity investing?

The Swedish stock market has historically returned approximately eight to ten per cent per year on average, including dividends. Individual companies and funds vary significantly. Past performance is not a guarantee of future returns.

Can the calculator predict future returns?

No. The calculator is a tool for understanding the CAGR concept and seeing how capital can grow under different assumptions. Actual returns depend on future events that nobody can predict. Past performance is not a guarantee of future returns.

Tool

CAGR calculator

Calculate the average annual growth rate of an investment, or project how capital grows at a given CAGR.

Guide

What CAGR tells you

CAGR smooths out volatility and gives a single figure for growth per year. That makes it straightforward to compare investments with different time horizons and sizes.

CAGR vs average return: The arithmetic annual average always overstates when returns vary. CAGR measures actual wealth accumulation and is always lower or equal.
CAGR conceals volatility: Two investments can have exactly the same CAGR but very different risk profiles. CAGR only measures start and end, not the swings in between.
Companies' CAGR: Sustained earnings CAGR and cash flow CAGR over five to ten years is one of the strongest quality signals we look for in company analysis.

Learn more

What is CAGR?

Read our explanation of CAGR in the glossary: what it measures, what it does not tell you, and how we use it in analysis.

CAGR in the glossary

Common questions about CAGR

: CAGR is calculated as ending value divided by starting value, raised to the power of one divided by number of years, minus one. Multiply by 100 to express as a percentage.
: The arithmetic average sums the annual returns and divides by the number of years. CAGR finds the smooth growth rate that produces the same ending value. When returns vary, CAGR is always lower than the arithmetic average.
: The Swedish stock market has historically returned approximately eight to ten per cent per year on average, including dividends. Individual companies and funds vary significantly. Past performance is not a guarantee of future returns.
: No. The calculator is a tool for understanding the CAGR concept and seeing how capital can grow under different assumptions. Actual returns depend on future events that nobody can predict. Past performance is not a guarantee of future returns.

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What CAGR tells you

What is CAGR?

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