Macroeconomics & Investing · Entry 25 of 71

What is Compound Annual Growth Rate?

Smoothing out volatile returns into a single metric

Core Definition

Compound Annual Growth Rate (CAGR) is the average annual growth rate of an investment over a specified period longer than one year.

Key Function

It smooths out volatile annual fluctuations, providing a single, representative annualized figure that shows how much the investment grew as if it compounded at a steady rate.