Glossary
/CAGR Full Form
The full form of CAGR is Compound Annual Growth Rate.
In the investing world, it is the most accurate way to calculate your average annual return over a specific time period. This smooths out the crazy ups and downs of the market into a single percentage. While absolute return shows your total profit, the CAGR tells you exactly how much your money grew each year on average, assuming it grew at a steady rate.
You will see this metric used everywhere to compare a 5-year FD return against a 5-year mutual fund return. Whenever a fund flashes a high Compound Annual Growth Rate in its ads, always cross-check it against your actual risk appetite before investing.