CAGR calculator — annualised return
Turn a start value, an end value and a period into one annual growth rate — with your own deposits taken back out of it.
Annualised return
7.2%
after removing 18,000 of deposits from the gain
- Total return
- 47.46%
- Gain
- $28,000
- Ignoring deposits
- 9.77%
| Starting value | $50,000 |
|---|---|
| Deposits added | $18,000 |
| Ending value | $96,000 |
| Gain | $28,000 |
- Deposits are assumed to have arrived evenly. A single large late deposit will flatter this figure.
Going from $50,000 to $96,000 over 7 years looks like 92%, but after removing $18,000 of deposits the annualised return is about 5%.
How this is calculated
How this is calculated
The compound annual growth rate
CAGR is the single constant rate that would take the start value to the end value over the period. It smooths away the year-to-year path, which is what makes two portfolios comparable.
CAGR = (end / start)^(1/years) − 1Deposits are not returns
Money you added is treated as arriving evenly, so the average dollar was invested for half the period and the capital base becomes start + deposits ÷ 2. Ignoring deposits entirely is how a 5% return gets reported as 92%.
adjusted CAGR = (end / (start + deposits/2))^(1/years) − 1Worked example: $50,000 grows to $96,000 over seven years, with $18,000 added
| Start | $50,000 |
|---|---|
| End | $96,000 |
| Deposits | $18,000 |
| Years | 7 |
| Annualised return | about 5% |
|---|---|
| Ignoring deposits | about 9.8% |
| Actual gain | $28,000 |
The unadjusted figure is nearly double the real one. That gap is the difference between a portfolio that performed and a portfolio that was fed.
What this assumes
- Deposits arrived evenly across the period.
- No withdrawals were made.
- Values are before tax.
- Dividends were reinvested.
Where this commonly goes wrong
- A single large deposit in the final year flatters the adjusted figure — the even-arrival assumption breaks down badly there.
- CAGR says nothing about the path: 5% a year and a 40% crash followed by a recovery produce the same number.
- Comparing a CAGR against an index return only works if the index figure also assumes reinvested dividends.
Questions
What is a good CAGR?
For a diversified equity portfolio, 6–8% before inflation over long periods is a reasonable historical benchmark. Anything far above that over a short window is usually a market cycle rather than skill, and worth re-checking over ten years.
Why is my return lower than I thought?
Almost always because deposits were counted as growth. If you put money in throughout the period, the balance grew for two reasons and only one of them is a return.
How is CAGR different from average annual return?
An average treats +50% then −50% as 0%, when the portfolio is actually down 25%. CAGR compounds, so it reports the −13.4% a year that actually happened. For anything multi-year, CAGR is the honest one.
Should I use CAGR or money-weighted return?
CAGR answers "how did the investment do". A money-weighted return, or IRR, answers "how did I do", accounting for when each dollar arrived. Fund managers are judged on the first, investors experience the second.
Does this account for tax and fees?
No. Enter after-fee values if your platform reports them that way. Tax depends on your jurisdiction and account type, so a taxable brokerage return and a retirement-account return are not directly comparable.
What period should I measure?
At least five years, and ideally ten. Shorter windows are dominated by where the market happened to be at each end, which says more about your start date than about the portfolio.
Related tools
Sources
This calculator does arithmetic on the figures you enter. It does not account for tax, fees, or your personal circumstances.
T0