The Compound Annual Growth Rate (CAGR) is the mean annual growth rate of an investment over a specified time period longer than one year. It represents one of the most accurate ways to calculate and determine returns for anything that can rise or fall in value over time.

CAGR differs from a simple average because it accounts for compounding. A simple average of annual returns can be misleading due to volatility.

CAGR is most useful when comparing the performance of different investments over the same time period, or evaluating how an investment has performed against a benchmark.