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Annualised return (CAGR)
How to compare investments held for different lengths of time.
CAGR = (final value ÷ starting value)1 ÷ years − 1Example
You invested 5,000 rials and it grew to 8,000 over 5 years:
Growth multiple8,000 ÷ 5,000 = 1.6
Fifth root1.61/5 = 1.0986
CAGR1.0986 − 1 = 9.86% a year
A common mistake: dividing the total return by the years. 60% ÷ 5 = 12% overstates it, because it ignores compounding.
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