What does CAGR stand for?

The CAGR acronym stands for compound annual growth rate. What is compound annual growth rate? The compound annual growth rate is the annual growth of an investment over a given period of time. The CAGR provides an even or smooth growth rate, meaning that it reflects a rate as if changes occurred equally over a period of time.

What is a growth rate (CAGR)?

A CAGR is a way to measure an investment's average annual growth rate over a certain period, typically longer than one year. You can use CAGR to compare the historical performances of investments or predict their future expected returns or gains.

What is the difference between CAGR and arithmetic mean?

An average annual return (or arithmetic mean) ignores the effects of compounding and can overestimate growth. CAGR, on the other hand, represents a consistent rate at which the investment would have grown. CAGR will always be equal to or less than the arithmetic mean. Are CAGR and IRR the Same?

What does a negative CAGR mean?

The CAGR doesn’t show the ups and downs of an investment’s performance over a period of time. A negative CAGR shows that an investment has decreased over a given period of time rather than increased. What does CAGR show? The compound annual growth rate (CAGR) essentially shows how much an investment has grown over time.