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Glossary · Pro tools

Yearly return (CAGR)

The steady yearly growth rate that would turn the starting amount into the ending amount.

Why it matters

A total return of 100% means very different things over 2 years and over 20. The compound annual growth rate puts every period on the same yearly footing.

How to read it

The S&P 500 has returned roughly 10% a year over the long run including dividends, about 8% without them. Compare against that.

Also called: compound annual growth rate, annualized return

Related

BacktestTesting a trading rule on past prices to see how it would have done.Maximum drawdownThe biggest fall from a high to a later low, before a new high was reached.

In the Cluenex app, this explanation opens next to every yearly return (cagr) figure, with the live reading for the stock you are looking at. Open it in Cluenex