Glossary term
CAGR
The smoothed annual growth rate of an investment over a period — the right metric for single-buy, single-sell investments.
CAGR (Compound Annual Growth Rate) tells you the constant yearly rate at which an investment would have grown if it grew steadily every year. Formula: CAGR = (ending value ÷ beginning value)^(1/years) − 1.
CAGR is the right metric for lumpsum investments — one buy date, one sell date. For SIPs, use XIRR instead; CAGR can't handle multiple buy dates. Indian equity mutual funds have historically delivered ~12% CAGR over 15+ year windows.
See also