Compound annual growth rate (CAGR) is the average annual growth rate in the price of a stock or a commodity over a specified period longer than one year.
When we invest in fixed income deposit scheme in banks, we earn fixed amount of interest compounded annually to our principal, but prices of stocks and commodities fluctuate on a daily basis. CAGR evens out the fluctuation and gives a representational number to show how much the investment would’ve grown if it were to grow steadily. CAGR can make it easy to compare the rate of returns of different stocks or commodities. It can also help with the comparison of returns between different asset classes.
This simple app allows you to calculate CAGR of your investments.