Total return and annualized return answer different questions
Total return is ending value divided by starting value, minus one. CAGR takes the same ratio to the power of one divided by years, then subtracts one. Starting at $1,000 and ending at $1,210 after two years gives 21% total return and 10% annualized growth.
CAGR smooths a path it does not observe
The same starting and ending balances can result from very different intermediate gains and losses. CAGR reports the single constant annual rate connecting those endpoints; it does not describe the arithmetic average of yearly returns, price volatility or the worst loss along the way.
Do not treat deposits as investment gains
Adding new money increases the ending balance without being a return on the original capital. If there are intervening deposits or withdrawals, simple CAGR is not an appropriate performance measure for that stream. This tool deliberately does not claim an internal-rate-of-return or time-weighted calculation.
Questions about this calculation
How can I check the inputs behind the result?
Open “Show calculation & assumptions” for the formula and timing conventions, then inspect the breakdown. Export CSV to keep the last calculated inputs and numerical results together.
Does this include taxes or changing market returns?
No tax calculation or variable market-return path is included. The task-specific assumptions above describe the scope. Calculated values are conditional on the inputs, not personalized recommendations.
Learn more
Start with the step-by-step future value formula guide.
Open the formula guide →How to calculate future value · Spreadsheet calculations · All learning guides
Use these figures to explore assumptions. Actual interest, returns, fees, taxes and purchasing power can differ.