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Updated 2mo ago.
Updated 2mo ago.
The CAGR is the annualized rate of return that would transform an initial investment into its final value over a given period, assuming gains are reinvested each year. It is the standard way to compare investment returns across different time periods.
If you invest $10,000 and after 5 years have $16,105, your CAGR is approximately 10% per year. The formula is: CAGR = (End Value / Start Value)^(1/n) - 1, where n is the number of years. VFV.TO has shown a CAGR of roughly 15-16% over 5 years (2019-2024), largely driven by the strong S&P 500 performance.
CAGR allows fair comparison of investments across different time periods. A fund that doubles in 6 years has a CAGR of ~12.2%, while another that triples in 12 years has a CAGR of ~9.6%. Without annualization, comparisons across different periods are misleading. That's why all returns on investirenbourse.ca are annualized (CAGR).