Calculate the average annual return (CAGR) of an investment based on its beginning and ending value.
This calculator computes the compound annual growth rate (CAGR) of an investment — the average annual rate of return that would have grown a beginning value to an ending value over a specified number of years. CAGR is the most common way to express a multi-year investment return as a single equivalent annual rate, smoothing over year-to-year fluctuations to give a meaningful average.
CAGR is the constant annual growth rate that, when compounded over the holding period, transforms the beginning value into the ending value. It is not a simple average of year-by-year returns — it accounts for compounding.
Formula: CAGR = (Ending Value ÷ Beginning Value)1 ÷ Years − 1. Total Return (%) = (Ending Value − Beginning Value) ÷ Beginning Value × 100. Net Gain = Ending Value − Beginning Value.
Example: An investment starting at A$10,000 and growing to A$18,000 over 5 years: CAGR = (18,000 ÷ 10,000)1/5 − 1 = 1.80.2 − 1 ≈ 12.47% per year. Total return = 80%. Net gain = A$8,000. This means the investment performed as if it grew at a steady 12.47% each year, even though the actual year-by-year returns may have varied. (Note: this example is for illustration purposes only.)
CAGR is widely used in Australia to describe the historical performance of superannuation funds, managed funds, exchange-traded funds (ETFs), and individual share portfolios. When evaluating a superannuation fund, the ATO's YourSuper comparison tool and APRA's published fund performance data report 5-year and 10-year annualised returns net of fees, which are CAGR figures — the same metric this calculator produces. A key nuance is that CAGR represents the return if you had simply held the investment unchanged — it does not account for any additions or withdrawals made during the period. If you regularly contributed to a managed fund or superannuation over the years, the effective return on your total contributed capital may differ from the CAGR of the fund itself (which measures the growth of a single hypothetical investment from start to end). For investment performance that involves ongoing contributions, the internal rate of return (IRR) or money-weighted return is a more accurate measure, though significantly more complex to calculate. For listed shares on the ASX, CAGR is most accurately calculated from total return (including dividends reinvested), not just price appreciation — a share that has flat-lined in price but paid consistent dividends has delivered positive total return that a price-only CAGR calculation would miss entirely.
A simple arithmetic average of annual returns (e.g., averaging +50% and -50% to get 0%) can be misleading because it ignores the compounding effect of losses and gains. If a A\$10,000 investment gains 50% in year 1 (to A\$15,000) and then loses 50% in year 2 (to A\$7,500), the arithmetic average return is 0% — but you have actually lost A\$2,500. The CAGR in this case is approximately -13.4% per year, which accurately reflects the real outcome.
Long-run CAGR figures for the ASX All Ordinaries total return index (including dividends reinvested) have historically been around 9-10% nominally over rolling 20-30 year periods. For a diversified portfolio including international shares and some defensive assets, 6-8% CAGR is a commonly used long-run planning assumption. Whether a given CAGR is "good" depends on the risk taken and the time period — a 15% CAGR over a short bull market may involve higher risk than a 7% CAGR from a diversified portfolio over 20 years.
Yes — if you enter the value of your superannuation balance at two points in time (and you haven't made additional contributions or withdrawals between them), the resulting CAGR gives your fund's approximate net investment return over that period. For a more rigorous comparison against APRA benchmark data, note that APRA reports net-of-fee returns for each investment option — compare your CAGR to the relevant option's reported annualised return over the same period.
To include dividends in the CAGR, use the total return ending value rather than just the capital price. For example, if you invested A\$10,000, the share price has grown to A\$14,000, and you received A\$2,000 in dividends (either reinvested or paid out), your ending value for a total return CAGR would be A\$16,000. For Australian shares, franking credits received as cash refunds should also be included in the total return figure for an accurate picture of pre-tax total return.
A nominal CAGR includes the effect of inflation — it is the actual dollar growth rate. A real (inflation-adjusted) CAGR strips out inflation to show the growth in purchasing power. For example, a 7% nominal CAGR during a period of 3% annual inflation implies a real CAGR of roughly 4% (approximately: nominal rate minus inflation rate). For long-term planning, real CAGR is more meaningful because it measures genuine wealth creation in terms of what your money can actually buy.
Yes — enter the purchase price as the beginning value and the current or sale value as the ending value. Note that this calculates capital-only CAGR (price growth); it does not include rental income received. For a total property return CAGR, you would need to add cumulative net rental income to the ending value. Also note that this gross CAGR does not account for purchase costs (stamp duty, legal fees), ongoing costs (council rates, maintenance, property management), or CGT on sale — the actual net CAGR after all costs is typically lower.
Disclaimer: The information and figures provided on this page are for educational and illustrative purposes only and do not constitute financial advice. CAGR is a mathematical measure of historical or projected investment growth and does not guarantee future returns. This calculator does not account for inflation, tax, investment fees, transaction costs, or the impact of periodic contributions and withdrawals. Past performance is not a reliable indicator of future performance. Consult a qualified financial adviser for investment advice specific to your circumstances.