In the world of finance, understanding the nuances between Compound Annual Growth Rate (CAGR) and Annual Growth Rate (AGR) is paramount for informed decision-making. While both metrics assess financial growth, they employ distinct methodologies, each offering a unique perspective.
A CAGR is far more reliable to track the growth of an investment. This is mainly because the annual return rate doesn’t consider the compounding factor, leading to overestimation. Thus it is useful to understand how a mutual fund grows in terms of CAGR and use it to compare different funds.
In the world of finance, understanding the nuances between Compound Annual Growth Rate (CAGR) and Annual Growth Rate (AGR) is paramount for informed decision-making. While both metrics assess financial growth, they employ distinct methodologies, each offering a unique perspective.
A CAGR is far more reliable to track the growth of an investment. This is mainly because the annual return rate doesn’t consider the compounding factor, leading to overestimation. Thus it is useful to understand how a mutual fund grows in terms of CAGR and use it to compare different funds.
Chat
United States
Login to comment