CAGR, or Compound Annual Growth Rate, tells you the smoothed-out annual rate at which your investment grew from its starting value to its ending value, as if it had grown steadily every single year. In reality, investments rarely move in a straight line — some years are great, others are poor — but CAGR flattens out all that bumpiness into one easy-to-compare yearly percentage.
For example, if ₹1,00,000 grew to ₹2,00,000 over 5 years, the CAGR would be roughly 14.9% per year, even though the actual year-to-year returns may have swung between losses and big gains. CAGR is extremely useful for comparing two different investments or funds over the same time period, but remember it only looks at the start and end points — it doesn't capture how volatile the ride was in between.