What is CAGR in the UK?

CAGR (Compound Annual Growth Rate) measures the annualized return of an investment over a specific period. Formula: (End Value / Start Value)^(1/years) - 1. It smooths out volatility to show consistent annual growth. UK investors use CAGR to compare different investments.

How do I calculate CAGR for UK stocks?

CAGR = (Final Value / Initial Value)^(1/Years) - 1. Example: £10,000 to £16,500 in 5 years = (16500/10000)^(1/5) - 1 = 10.5% CAGR. This shows the consistent annual return needed to reach the final value.

What is a good CAGR in the UK?

A good UK CAGR depends on risk: Savings 2-4%, Bonds 4-6%, Property 5-8%, FTSE 100 7-9%, Global Equities 8-10%, Business 15-30%. For long-term investing, 7-10% CAGR is considered good for UK equity investors.

What is the difference between CAGR and average return?

CAGR shows the smoothed annual growth rate, accounting for compounding. Average return is the arithmetic mean of annual returns and doesn't consider compounding. Example: Returns +20%, -10%, +15% = Average 8.3% but CAGR is 7.4%. CAGR is more accurate for investment performance.

CAGR Calculator UK - Compound Annual Growth Rate Calculator

Investment Type	5-Year CAGR	10-Year CAGR
Savings Account	3.0%	2.8%
UK Gilts	4.5%	4.2%
FTSE 100	8.5%	7.8%
Global Equities	9.5%	8.5%
UK Property	6.5%	5.8%
Tech Sector	15%+	12%+

📝 Complete Guide to CAGR in the UK

This CAGR calculator UK helps you measure the Compound Annual Growth Rate of your investments. CAGR is the most accurate way to compare investment performance across different time periods and asset classes.

📊 What is CAGR?

CAGR (Compound Annual Growth Rate) measures the annualized return of an investment, smoothing out volatility:

Formula: CAGR = (End Value / Start Value)^(1/years) - 1
Example: £10,000 to £16,500 in 5 years
Calculation: (16,500/10,000)^(1/5) - 1 = 10.5%
Total Return: 65% over 5 years

💡 Why CAGR Matters for UK Investors

Comparable Returns: Compare investments with different time periods
Smooths Volatility: Shows consistent annual growth rate
Performance Tracking: Measure portfolio performance accurately
Goal Planning: Set realistic investment targets
Peer Comparison: Compare against UK market averages

📈 UK Investment CAGR Examples

FTSE 100 (10 years): £10,000 → £21,500 = 7.9% CAGR
UK Property (10 years): £200,000 → £350,000 = 5.8% CAGR
Global Equities (10 years): £10,000 → £22,600 = 8.5% CAGR
Tech Fund (10 years): £10,000 → £31,000 = 12% CAGR

📊 CAGR vs Average Return

Understanding the difference is crucial:

Average Return: Arithmetic mean of annual returns
CAGR: Geometric mean showing compound growth
Example: Returns +20%, -10%, +15%
Average: (20-10+15)/3 = 8.3%
CAGR: (1.20×0.90×1.15)^(1/3)-1 = 7.4%
Why: CAGR accounts for compounding and volatility

💡 How to Maximize Your CAGR

Long-Term Investing: 10+ years for best CAGR
Diversification: Reduce volatility while maintaining growth
Low Fees: Index funds with 0.1-0.5% fees
Reinvest Returns: Compound growth accelerates CAGR
Regular Investing: Pound cost averaging smooths returns
Tax Efficiency: Use ISAs and pensions

📊 UK CAGR Statistics (2026)

FTSE 100 20-year CAGR: 7.2%
UK Property 20-year CAGR: 6.0%
UK Gilts 20-year CAGR: 4.5%
Global Equities 20-year CAGR: 8.0%
Top UK Investors: 15%+ CAGR over 10 years

⚠️ Important Considerations

Inflation: Real CAGR = Nominal CAGR - Inflation (2-3%)
Fees: Fund fees (0.1-1%) reduce CAGR
Tax: CGT and Income Tax affect net CAGR
Risk: Higher CAGR usually means higher risk
Time Horizon: Longer periods give more reliable CAGR

CAGR Calculator UK

📊 Your Investment Details

📊 CAGR Calculation Breakdown

📊 UK Investment CAGR Comparison