Compound Annual Growth Rate (CAGR)

Compound Annual Growth Rate (CAGR) measures the average annual growth rate of an investment over a specified period, accounting for compounding. It is widely used to compare the growth rates of investments and assess their performance over time. CAGR smooths out the volatility of year-to-year growth, providing a clear picture of an investment’s true growth trajectory.

• Measures average annual growth rate over time.
• Accounts for compounding, smoothing out volatility.
• Commonly used to compare long-term investment performance.
• Gives a clear picture of growth trends.