What is blended CAGR?
A blended CAGR is the weighted average of the compound annual growth rates of the holdings in a portfolio. Each holding's growth rate is weighted by its share of the total, so a position you hold a lot of moves the blended number more than a small one does.
It answers a single planning question: if each holding grows at its own assumed rate, what single growth rate describes the whole portfolio? That one figure is what most retirement projections actually run on, rather than a separate rate per holding.
The formula
The math is a weighted average, not a simple average. Adding up the rates and dividing by the number of holdings would treat a 2% cash sliver the same as a 60% stock position, which is rarely what you want.
How to calculate blended CAGR
- List each holding with its expected compound annual growth rate.
- Find each holding's weight: its value divided by the total portfolio value.
- Multiply each holding's weight by its CAGR to get that holding's contribution.
- Add the contributions together. That sum is your blended CAGR.
- If the weights did not sum to 100%, divide the sum by the total of the weights to normalize.
A worked example
Take a four-part portfolio. Multiply each weight by its rate, then add the four contributions.
| Holding | Weight | Expected CAGR | Contribution |
|---|---|---|---|
| US total market | 60% | 8.0% | 4.80% |
| International stocks | 20% | 6.5% | 1.30% |
| Bonds | 15% | 4.0% | 0.60% |
| Cash | 5% | 2.0% | 0.10% |
| Blended CAGR | 100% | 6.80% |
At 6.80%, $500,000 left to compound for 20 years grows to about $1.86M, a total gain of 273%. The calculator above starts loaded with this exact example, so you can change a weight or a rate and watch the blended figure move.
Blended CAGR vs your portfolio's real return
Worth being straight about this. A blended CAGR built from expected rates is a forward-looking assumption, not a measured result.
Two things separate the assumption from reality. Rebalancing changes your weights over time, so the blend you start with is not the blend you finish with. And sequence of returns means the order in which gains and losses arrive matters once you are drawing the portfolio down, even when the long-run average is identical. Use the blended figure as a clean planning input, then stress-test it.
That stress test is the difference between a single-number guess and a plan. A Monte Carlo run takes the same blended assumption and shows how the outcome holds up across thousands of different return orderings, not just the smooth average.
Common mistakes
Averaging the rates without weighting
Adding the rates and dividing by the count ignores how much you actually hold of each. The weighting is the whole point.
Confusing CAGR with average annual return
CAGR is the smoothed compound rate that connects a start value to an end value. The simple average of yearly returns is almost always higher than CAGR, because volatility drags compounding down.
Treating a past CAGR as a future promise
A holding that compounded at 12% for a decade is not contractually going to repeat it. Expected rates are estimates, which is exactly why the forward projection deserves a stress test.
Questions people ask
What is a blended CAGR?
It is the weighted average of the compound annual growth rates of everything in a portfolio. Each holding's rate is weighted by its share of the total, so larger positions pull the blended figure toward their own rate.
How do you calculate blended CAGR?
Multiply each holding's weight, as a decimal, by its expected CAGR, then add the results. If your weights do not sum to 100%, divide that total by the sum of the weights to normalize it.
Is blended CAGR the same as my portfolio's actual return?
No. A blended CAGR from expected rates is a planning assumption. Your realized return also depends on rebalancing and the order returns arrive in, so treat it as an input, not a guarantee.
Does this calculator store my numbers?
No. Everything runs in your browser. Nothing you type is sent to a server or tied to an account.
From one number to a full plan
A blended CAGR is one input. Plan With Clarity takes that assumption into a complete retirement projection: withdrawal strategy, taxes, Social Security timing, healthcare costs, and a Monte Carlo stress test that runs your blended rate across thousands of return orderings.
Open Plan With ClarityNo account linking and no selling of your data. You can run the core models without connecting any outside financial accounts.