Inspired by SMOL's post, I decided to do some reading and a short post on these "cheem cheem" terms that previously I do not use.
CAGR stands for Compound Annual Growth Rate. It is useful in measuring (in %) how much an investment has increased in value over a fixed period of time.
Watch the illustration in this video here - http://www.investopedia.com/calculator/cagr.aspx
So if your investment grew from $1000 to $1500 over a period of 3 years, the CAGR is 14.5%. Which means the amount increased by 14.5% on its compounded value each year, as follow
Year 1: $1000+14.5%
Year 2: Year 1 compounded $$ + 14.5%
Year 3: Year 2 compounded $$ + 14.5% = $1500
This is provided no fresh fund is injected into the investment (the investment compounds itself) over the three years. So if investment A returns 14.5% and investment B returns 10%, obviously investment A is doing better and probably worth investing more money in going forward......