CAGR Calculator
Compute the compound annual growth rate that turns a starting capital into an ending capital over a period.
Quick answer: The compound annual growth rate is the single yearly rate that, compounded each year, grows the starting capital into the ending capital over the given number of years. It smooths away the bumps of individual years into one representative rate. The tool raises the ratio of ending to starting capital to the power of one over the years and subtracts one.
How to use it
Enter the capital you started with, the capital you finished with, and the number of years between them. The output is the compound annual growth rate as a percentage, plus the total growth over the whole period. CAGR assumes smooth compounding and says nothing about the volatility or drawdowns along the way.
Formula
CAGR = ( Ending ÷ Starting ) ^ ( 1 ÷ Years ) − 1
Multiply by 100 to express as a percentage. Years may be fractional.
Limitations of the CAGR Calculator
The CAGR Calculator is a teaching aid, not a live risk system. It does not model the following:
- The path between the endpoints — CAGR is blind to volatility and to every drawdown along the way
- Sensitivity to the exact start and end dates, especially over short test periods
- Trading costs, unless the equity endpoints are already net of them
- Interim cash flows; use internal rate of return (IRR) when capital is added or withdrawn during the period
Frequently asked questions
How is a backtest's CAGR different from its total return?
Total return is the raw percentage gain from the first equity value to the last, regardless of duration. CAGR divides that growth across the years geometrically, so a 47 percent total return over 3 years is a CAGR of about 13.7 percent, not 47 percent — the figure that lets you compare backtests of different lengths.
What is the biggest weakness of CAGR when judging a backtest?
It only sees the first and last equity values, so it is completely blind to the path in between. Two backtests with the same CAGR can have entirely different volatility and drawdowns, which is why CAGR must always be paired with a risk measure.
How do I handle a backtest that is not a whole number of years?
Measure the period precisely — calendar days divided by 365.25, or trading days divided by about 252 — and use that fractional value as the exponent's denominator. Rounding 3.25 years down to 3 inflates the reported CAGR.
Should I compare a backtested CAGR against the Nifty price index or the TRI?
Use the Nifty 50 Total Return Index. The price index excludes dividends and understates the market by roughly 1 to 1.5 percent a year, which would unfairly flatter your strategy's relative CAGR in a benchmark comparison.
Why is a backtested CAGR so sensitive to the end date?
Because it depends only on the endpoints, a single strong or weak final month can noticeably move it, especially over short backtests. Reporting CAGR over several rolling windows reveals how much of the figure is date luck rather than durable edge.
Runs entirely in your browser — no data leaves your device. Illustrative and educational only; real-world charges and market conditions apply in practice.