Frequently Asked Questions
What is CAGR?
Compound Annual Growth Rate is the smoothed annual return of an investment over a period, assuming it grew at a steady rate.
How is CAGR calculated?
CAGR = (Final Value / Initial Value)^(1 / number of years) – 1, expressed as a percentage.
How is CAGR different from absolute return?
CAGR annualises the return over time, while absolute return is the total percentage gain regardless of how long it took.
What is a good CAGR?
It varies by asset class. Compare your CAGR against relevant benchmarks, such as index returns, for useful context.
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