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Glossary · investing

What is CAGR (compound annual growth rate)?

The smoothed annual growth rate that would take a starting value to an ending value.

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CAGR = (end / start)^(1/years) − 1. It's how investment returns are reported over multi-year periods, and how you fairly compare investments with different holding periods.

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Frequently asked questions

CAGR vs average return?

Average ignores compounding and always overstates the realised return path. CAGR is the geometric truth.

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