Key facts
| CAGR | Geometric mean return: ((end/start)^(1/years) − 1) × 100. |
|---|---|
| Category | Finance / advanced analytics |
| Related concepts | Simple vs compound interest, percentage points vs relative change. |
Definitions
CAGR
Smooth multi-year growth rate that would produce the same ending balance with annual compounding.
Percentage point
Absolute difference between two rates, not their relative percent change.
Comparison table
| Topic | Guidance |
|---|---|
| CAGR vs average return | Arithmetic averages overstate volatile paths; CAGR is geometric. |
| APR vs note rate | APR includes certain fees/spreads; compare like with like across lenders. |
❓ Frequently Asked Questions
Which tool for a multi-year portfolio?
Use CAGR when you have start, end, and years; use investment growth when adding periodic contributions.
Percentage points vs percent change?
Moving 4%→5% is +1 point but +25% relative change—use the percentage point tool when wording matters.
Glossary references
Pair percent language with conversion pages when you mix fractions, decimals, and ratios.