Glossary
CAGR: meaning, example and why it matters
Compound annual growth rate: the steady yearly rate that would take a starting value to an ending value over a period. It smooths out ups and downs, so it can hide how bumpy the journey was.
Worked example
₹1,00,000 growing to ₹1,61,051 over 5 years is a CAGR of 10%, because 1,00,000 × 1.10⁵ = 1,61,051. The path may have included a 25% rise one year and a 5% fall another; CAGR shows only the steady rate that links start and end.
Illustrative numbers for explanation only. They are not market data, a forecast or a suggestion.
Why it matters
It puts growth over different periods on one yearly scale so funds or investments can be compared. It hides how bumpy the ride was.
Related terms
See it in practice
Frequently asked questions
Is CAGR the same as the average yearly return?
No. A simple average adds the yearly returns and divides, while CAGR compounds them. For volatile series the two numbers differ.
Is this page investment advice?
No. CAGR is explained in general terms with illustrative numbers. Market Dekho is not a SEBI-registered Research Analyst or Investment Adviser.
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Start learning free →Educational content, not investment advice. Market Dekho is not a SEBI-registered Research Analyst or Investment Adviser. Spotted a mistake? Email marketdekho01@gmail.com.