Back to Glossary
Return Metric
CAGR
Compound Annual Growth Rate
Definition
The annualized rate of return that an investment would have needed to grow from its beginning value to its ending value, assuming profits were reinvested at the end of each year.
Formula
(End Value / Start Value)^(1/Years) - 1
Good
> 8%
Bad
< 5%
Example
If you invested €10,000 and after 10 years it grew to €21,589, your CAGR would be 8% — meaning your investment grew at an average of 8% per year, compounded.