CAGR Calculator — Compound Annual Growth Rate for Traders
Month-to-month returns fluctuate wildly — CAGR smooths them into the single honest annual rate that lets you compare your performance against the S&P 500 (10% historical average) or professional fund managers (15%+). Enter starting balance, ending balance, and years to get your compound annual growth rate and benchmark comparison. A $10,000 account grown to $25,000 in 3 years = 35.7% CAGR.
Updated · Reviewed by Foysal Mostafa
6 months = 0.5 · 18 months = 1.5
✓ Growing Account
CAGR
+35.72%
per year
Total Gain
+150.00%
Net Profit
+$15,000.00
Years
3
vs Benchmarks
Why Use the CAGR Calculator?
Month-to-month returns fluctuate wildly — an 80% year followed by a −30% year looks different depending on how you frame it. CAGR smooths everything into a single honest annual rate that lets you compare your performance against the S&P 500, professional fund managers, or other strategies regardless of the measurement period.
Formula Used
CAGR = (Ending Balance ÷ Starting Balance)^(1 ÷ Years) − 1Worked Example
Account started with $25,000 in January 2023, grew to $48,000 by September 2025 (2.75 years). CAGR = ($48,000 ÷ $25,000)^(1÷2.75) − 1 = (1.92)^0.364 − 1 = 1.267 − 1 = 26.7% per year. Well above the S&P 500 (10% CAGR) and the professional fund manager threshold (15%). Compounding $25,000 at 26.7% for 10 years = $235,000.
How to Use the CAGR Calculator — Step by Step
- 1
Enter your starting balance
Input your account balance at the beginning of the period you want to measure.
- 2
Enter your ending balance
Input your current or final account balance.
- 3
Enter the number of years
Input how many years the period covers. You can use decimals — 6 months = 0.5 years, 18 months = 1.5 years.
- 4
Read your CAGR
The calculator shows your compound annual growth rate — the consistent annual return that would have produced your actual results — plus a comparison against common benchmarks.
What Your CAGR Calculator Results Mean
CAGR %
The compound annual growth rate — the consistent annual return that would produce your actual account growth if applied every year. This is the standard metric for comparing multi-year trading performance on equal terms.
Total Gain %
The total percentage return across the entire measurement period. Less useful than CAGR for comparison purposes because it does not account for how long the growth took.
Benchmark Comparison
How your CAGR compares to the S&P 500 (~10% historical average) and professional manager benchmarks (~15%). Use this to objectively evaluate whether your strategy is adding value versus simply investing in an index fund.
CAGR Calculator — Frequently Asked Questions
Q.What is CAGR and why do traders use it?
CAGR (Compound Annual Growth Rate) is the annualized return that would produce your actual account growth if applied consistently each year. Traders use it to measure long-term performance, compare strategies over different time periods, and benchmark against indices like the S&P 500 (historically ~10% CAGR). It eliminates the distortion of volatile year-to-year returns.
Q.What is a good CAGR for a trading account?
The S&P 500 returns roughly 10% CAGR long-term. Professional fund managers who beat 15% CAGR consistently are considered excellent. Retail traders with 20–30% CAGR are doing very well. CAGRs above 50% are possible short-term but rarely sustainable. Be cautious of anyone claiming 100%+ CAGR over multiple years — it almost always involves either extreme risk or unverified results.
Q.How is CAGR different from average return?
Average return adds up yearly returns and divides by years. CAGR compounds them. A trader who gains 100% in year 1 and loses 50% in year 2 has an average return of 25% — but actually breaks even (CAGR = 0%). CAGR reflects real account growth; average return can be misleading.
Q.Can CAGR be negative?
Yes — if your ending balance is less than your starting balance, CAGR is negative. A trader who started with $20,000 and ended with $15,000 over 2 years has a CAGR of −13.4%. Negative CAGR is important to know — it means the strategy is destroying capital at that annual rate.
Q.What is a good CAGR for a trading account?
Warren Buffett averages ~20% CAGR. The S&P 500 averages ~10% CAGR. For active traders: 30–50% CAGR is achievable with disciplined risk management. 50–100% CAGR is possible but requires taking on more risk. Any trading strategy claiming 200%+ CAGR consistently is likely either unsustainable, unverified, or involves extreme leverage. Use this calculator to set realistic multi-year compounding goals.
About the Author
Forex Trader & Software Developer · Founder, TradeCalc
Active forex trader since 2019, specializing in risk management and systematic position sizing. Built TradeCalc to replace manual spreadsheets used in live trading. Every calculator is cross-verified against broker platforms before publishing.
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