CAGR Explained: The Best “Comparison” Metric for Investors
Learn CAGR (compound annual growth rate) with simple examples. Compare investments over different timeframes and avoid the most common CAGR mistakes.
CAGR tells you the annual rate that would turn your starting value into your ending value.
The formula
CAGR = (Final / Initial)^(1 / Years) - 1
When CAGR is best
Comparing investments with different holding periods.
Common mistakes
Using CAGR for short-term trading or when contributions are involved.
Tools: