CAGR
The smoothed average yearly growth rate of an investment over a multi-year period.
CAGR stands for Compound Annual Growth Rate. It answers one question: what steady yearly rate would have taken my money from the start value to the end value? It smooths out the bumps, so it is useful for comparing funds over the same multi-year period. Use CAGR for a single amount held over years, and XIRR when money went in on many dates, like an SIP.
Questions people ask
What is the full form of CAGR?
CAGR stands for compound annual growth rate: the single steady yearly rate that would have grown your money from the start value to the end value over a period.
Should I use CAGR or XIRR?
Use CAGR for a single amount held over years. Use XIRR when money went in on many dates, like an SIP, because it accounts for each instalment's timing.
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