Why "Per Year" Matters
Saying an investment "grew 45%" doesn't mean much without knowing the timeframe. 45% over 2 years is a very different result from 45% over 8 years. CAGR fixes this by converting any total growth into an equivalent steady annual growth rate, so investments over different time periods can be compared fairly.
The Formula
CAGR is calculated as:
CAGR = (Exit Price / Entry Price) ^ (1 / Number of Years) − 1
It answers: "If this investment had grown at a perfectly steady rate every year between these two dates, what would that rate have been?" It smooths out all the ups and downs in between and gives you the single number that reconciles the start and end points.
How to Calculate It on QuantLogIQ
On any fund, stock, or index chart, click the CAGR button, then click your entry point and your exit point directly on the chart. QuantLogIQ reads the price and date at each click and instantly shows you the entry price, exit price, number of years between them, and the resulting CAGR.
A Word of Caution
CAGR describes the path between exactly two points — it says nothing about how bumpy the ride was in between. Two investments can share an identical CAGR while one had a much smoother journey than the other.