What does CAGR mean?

The Compound Annual Growth Rate (CAGR) is a financial term that measures the annual growth rate of an investment over a specific period of time, taking into account the effect of compounding. It calculates the constant rate of return over the time period that would have been needed to achieve the current value, starting from the initial investment value.

CAGR is used to smooth out the returns of an investment and provide a more accurate account of the return over time. Unlike average annual return, it takes into account the effect of compounding. To learn more, visit zerodha.com/varsity/chapter/the-stock-markets and refer to point 6.7.

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