Glossary

The Compound Annual Growth Rate (CAGR) is a measure of the average annual growth rate of an investment over a specified period.

It represents a smoothed, constant rate of return that takes into account the effects of compounding, making it useful for comparing investments with different time horizons and volatility. 📈

For example, if you invested $10,000 in a stock that grew to $20,000 over five years, the CAGR would be approximately 14.87%. This means that, on average, the investment grew at a 14.87% rate each year over the five-year period.

Fun fact: The CAGR is frequently used in business plans and projections to estimate the growth of revenue, customer base, or market share, providing investors and analysts with a consistent method to evaluate potential investments. 💰