What is the meaning of CAGR?

The Compound Annual Growth Rate (CAGR) is a financial metric that gauges the annual growth rate of an investment throughout a defined period, factoring in the impact of compounding. It computes the consistent rate of return over the given period necessary to attain the present value, commencing from the initial investment amount.

CAGR serves the purpose of mitigating the volatility in investment returns, offering a more precise representation of the cumulative return over time. Unlike the average annual return, it incorporates the influence of compounding.

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