Betta Signals

Learn · Returns and data

Compound annual growth rate (CAGR)

CAGR is the constant compounded yearly rate that would connect a beginning value with an ending value over a stated number of years.

By Betta Signals Research Desk · Reviewed October 24, 2026

Plain-English definition: CAGR is the constant compounded yearly rate that would connect a beginning value with an ending value over a stated number of years.[1]

How the term is used

CAGR turns a beginning value, an ending value, and an elapsed number of years into one compounded annual rate. The calculation uses the endpoints rather than listing each year's return.[1]

What to check before relying on it

Use exact dates and a consistent return basis. Contributions, withdrawals, distributions, and periods shorter than a full year require methods that match the question being asked.

Example

Growing from $100 to $121 over two years produces a 10% CAGR, even if the first year's return was far above 10% and the second year's was below it.

Annualized returnDrawdownTotal return

Research last reviewed: October 24, 2026. This definition is educational and does not evaluate a particular security.

Sources

  1. Nasdaq: Compound Annual Growth Rate — compound annual growth rate based on prior-year balances. Accessed October 24, 2026.