CAGR (Compound Annual Growth Rate)
The steady annual growth rate that would take an investment from its starting value to its ending value.
CAGR smooths a bumpy multi-year return into a single, steady annual percentage. Real investments rarely grow the same amount every year — CAGR answers "what constant annual rate would have produced the same overall result?" It's useful for comparing investments over different time periods on equal footing.
Worked Example
An investment that grows from $10,000 to $20,000 over 8 years has doubled, which works out to a CAGR of about 9.05% — even if the actual year-to-year returns bounced between -15% and +30% along the way.
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