What is CAGR?
Compound Annual Growth Rate (CAGR) is the rate of return that would be required for an investment to grow from its beginning balance to its ending balance, assuming the profits were reinvested at the end of each year of the investment's lifespan.
Why use CAGR?
It provides a "smoothed" rate of return, filtering out the volatility of year-to-year changes. It's one of the most accurate ways to calculate and determine returns for anything that can rise or fall in value over time.