Investing
CAGR
Also known as: Compound Annual Growth Rate
The steady yearly rate at which a single investment grew, smoothing out the ups and downs.
CAGR answers: if my money had grown at one constant rate every year, what would that rate be? It ignores the year-to-year rollercoaster.
It works for a single lumpsum investment measured from start to end. For regular SIP investing, use XIRR instead.
It is great for comparing two investments over the same period on an apples-to-apples basis.
For example
₹1L growing to ₹2L in 6 years is a CAGR of about 12%, even if some years it fell and some it jumped 20%.