// CAGR → ABSOLUTE RETURN

CAGR to Absolute Return Calculator

Convert an annualized growth rate into the total return over a chosen number of years.

// INPUTS

CAGR (% per year)

NUMBER OF YEARS (years)

// OUTPUT

TOTAL ABSOLUTE RETURN

210.58%

GROWTH MULTIPLE3.11×

CAGR12.00%

// FORMULA

AbsoluteReturn = (1 + CAGR) ^ Years − 1

CAGR is expressed as a decimal: 12% = 0.12.

// EXAMPLE

// WORKED OUT

CAGR of 12% over 10 years:
  Return = (1 + 0.12) ^ 10 − 1
         = 3.1058 − 1
         = 2.1058
         = 210.58% total

// WHAT THIS MEANS

Most published mutual fund and index returns are quoted as CAGR. To know what that actually means for your money over the long run, you have to convert it back into a total return. The compounding effect is usually larger than people expect — 12% CAGR triples your money in just over 10 years.

// FAQ

Why is the absolute return so much higher than CAGR × years?+

Because of compounding. Each year's gains earn returns the next year. CAGR × years is the simple-interest answer; the formula above is the compound-interest reality.

What does a CAGR of 0 mean?+

It means the value at the end equals the value at the start, regardless of how long the period was.