CAGR (Compound Annual Growth Rate)
The steady annual rate at which an investment would have grown if it had grown at a consistent pace.
CAGR (Compound Annual Growth Rate) is the hypothetical annual rate at which your investment would have grown if it had grown at a consistent pace — regardless of actual year-to-year fluctuations.
Formula
CAGR = (End Value / Start Value)^(1/t) − 1Where t is years.
When to use it
CAGR is ideal for comparing returns across different investments over different time periods. Unlike ROI, it accounts for time.
Example: Investment grows from €1,000 to €2,500 over 7 years → CAGR = (2500/1000)^(1/7) − 1 ≈ 13.9%/year