Question 1

What is CAGR?

Accepted Answer

CAGR (compound annual growth rate) is the single steady annual growth rate that would turn a start value into an end value over a given number of years, if growth compounded smoothly every year. It's calculated as (end value ÷ start value)^(1 ÷ years) − 1.

Question 2

How does CAGR differ from average annual return?

Accepted Answer

A simple average annual return adds up each year's percentage return and divides by the number of years, which can be misleading because it ignores compounding and the order of returns. CAGR instead finds the one smooth rate that reconciles the actual start and end values, which is why CAGR is almost always lower than the simple average when returns are volatile.

Question 3

What has VOO's historical CAGR been?

Accepted Answer

VOO's since-inception total return CAGR (price plus reinvested dividends) has been estimated in the roughly 14%–15% range by third-party data providers, though this includes a strong bull-market period and isn't a guarantee of future results. This calculator's default price-growth assumption (12%) is a price-only estimate, which is lower than the total-return CAGR because it excludes dividends — enter your own start and end prices above to calculate CAGR for any specific period.

Question 4

Is CAGR the same as total return?

Accepted Answer

No. Total return is the overall percentage gain (or loss) over the entire period, while CAGR annualizes that gain into a single yearly rate. A 100% total return over 10 years and a 100% total return over 20 years represent very different CAGRs (about 7.2% vs. 3.5%), even though the total return figure alone looks identical.

Question 5

Does this calculator include dividends?

Accepted Answer

No — this tool calculates price-only CAGR from the start and end prices you enter. To include reinvested dividends in a growth projection, use the main VOO calculator or the S&P 500 calculator, which model price growth and dividends separately.

Question 6

Can I use this for a period shorter than a year?

Accepted Answer

Yes — enter years as a decimal (e.g., 0.5 for six months). The formula still works, though CAGR is most meaningful over multi-year periods; a CAGR annualized from a very short, volatile window can look extreme and isn't a reliable predictor of future annual returns.

VOO CAGR Calculator

Why CAGR smooths out volatility

Frequently asked questions