# CAGR (Compound Annual Growth Rate)

*Saving & Investing — Finicade finance glossary*

CAGR is the constant annual growth rate that would take a starting value to an ending value over a period — the smoothed rate of a bumpy journey. It's the honest way to compare investments over different horizons, and it's always lower than the simple average return when results vary, because losses hurt more than equal-sized gains help. Doubling in five years is a 14.9% CAGR, not 20%.

**Formula:** `CAGR = (Ending value ÷ Beginning value)^(1 ÷ Years) − 1`

**Also known as:** CAGR, compound annual growth rate, annualised growth rate

**Related terms:** [Annualized Return](https://finicade.com/glossary/annualized-return), [Compound Interest](https://finicade.com/glossary/compound-interest), [Rule of 72](https://finicade.com/glossary/rule-of-72), [Total Return](https://finicade.com/glossary/total-return), [Geometric Series](https://finicade.com/glossary/geometric-series)

Source: https://finicade.com/glossary/cagr