CAGR, IRR, and TWRR: Investment Returns Explained

CAGR (Compound Annual Growth Rate) tells you the smoothed annual return of a lump sum investment over a period. Simple and useful, but it ignores the timing and size of contributions.

IRR (Internal Rate of Return) accounts for when you put money in and took it out. It is the most honest measure of how your actual money performed.

TWRR (Time-Weighted Rate of Return) strips out the effect of cash flows and measures the fund itself. Fund managers report TWRR because it isolates their decisions from yours.