ROI vs CAGR: Which Metric Should You Use?
ROI vs CAGR: learn the key differences, when ROI is fine, when CAGR is better, and how to avoid misleading comparisons across timeframes.
ROI is total return. CAGR is time-normalized return. They answer different questions.
Use ROI when
- You need a quick snapshot
- Timeframes are similar
Use CAGR when
- You compare different time periods
- You want an annualized rate
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