The Compound Annual Growth Rate (CAGR) is a useful measure that shows the mean annual growth rate of an investment over a specified time period, assuming the investment grows at a steady rate. It is calculated using the formula: CAGR = (Ending Value / Beginning Value)^(1/n) - 1, where "n" is the number of years. This metric helps investors understand how much their investment has grown on average each year. CAGR is particularly valuable because it smooths out the effects of volatility and provides a clearer picture of an investment's performance. For example, if an investor puts money into a stock or mutual fund, CAGR can help them compare the growth of different investments over time, making it easier to make informed decisions.