CAGR: drag the ending value
Drag the top of the ending bar to set the finish value. The headline is the one steady yearly rate that would have connected the start to that finish. The default run is 6 years, and the same two values over 3 years more than double the rate.
CAGR
10.29%
Finish after 6 years
$18,000
Drag the end of the curve to set the finish. The start is a fixed $10,000. Illustrative arithmetic, not a forecast or advice.
In short
- Drag the ending bar up for a higher finish, down for a lower one.
- Read the headline: it is the CAGR, not the total growth.
- Pull the years slider from 6 down to 3 and watch the same two values demand a much higher yearly rate.
- Set the finish equal to the start, where the CAGR is zero and the bar sits on the baseline.
The window is part of the number
CAGR is the one constant yearly rate that turns a start value into an end value. Hold the two values still and cut the years in half, and the rate more than doubles, because each year has to carry more of the same multiple.
So a CAGR quoted without its period is not a number anyone can use. Two funds reporting different rates on the same money are often reporting different windows. How CAGR works is the identity, with the CAGR calculator under the answer.
A rate of zero is a real reading
Drag the ending bar down onto the start and the CAGR prints zero. The money did not grow. An arithmetic average of a bumpy path can still print a healthy yearly figure in that situation, which is a different object: arithmetic against geometric return is that pair, and volatility drag is why the average sits above the compound rate.
The formula also assumes one amount in and one amount out. Deposits in between are counted as growth. That is when you want a cash-flow rate, not a CAGR.
The inverse of a compounding engine
Run this arithmetic forward and you have compound interest: a rate in, an ending value out. This explorer takes the ending value and gives the rate. The compound interest explorer is the forward picture, a curve you drag to set the return.
Common questions
Why does cutting the years raise the rate so much?
Because the years sit in the exponent. The growth multiple is the same. The root gets larger as the years get smaller, so each remaining year has to do more of the work.
Can the CAGR go negative?
Yes. Drag the ending bar below the start and the rate is the steady yearly pace at which the money shrank. It is read exactly like a positive CAGR.
Is this a forecast?
No. It is the one constant rate that would have connected two values you set, which is what makes two windows comparable. Real paths bounce. It is educational material, not advice.
Keep reading
This page is educational material, not financial advice. The figures come from the formula shown and assume the inputs you enter hold for the whole term. Your own rate, fees, taxes and timing will differ, so treat the output as arithmetic to check a decision against, not as a recommendation.