CAGR
Compound Annual Growth Rate, the smoothed annual return between two dates.
CAGR is the rate that, compounded annually, would take a starting value to an ending value over a given period. The formula is `(End / Start) ^ (1 / years) - 1`. CAGR is most accurate for a single lump-sum investment held for the full period. For SIPs and irregular flows, use XIRR instead. CAGR also hides volatility, two funds with the same 12% CAGR can have wildly different worst years.
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Inside Finlo
A 60-second lesson that puts this term in context, alongside the others, lives inside the Finlo app.