CAGR is a measure of the annualized rate of return that investment has generated over a specific period of time. It represents the average annual growth rate of an investment, taking into account the effects of compounding, which is the process of earning returns on both the principal amount invested and the accumulated interest or dividends. Share

CAGR. Imagine you have $10,000. This year, your $10,000 grows 100%, leaving you with $20,000. The following year, your investment falls 50%, taking you back to your original amount, $10,000. Over those two years, your annualized gain is zero (you haven’t made or lost any money). The zero-percent is known as the Compound Annual Growth Rate (CAGR).