The Compound Annual Growth Rate (CAGR) is a useful metric that measures the mean annual growth rate of an investment over a specified time period, assuming that the profits are reinvested at the end of each period. It provides a smooth annual growth rate that eliminates the effects of volatility and gives a clearer picture of the investment's performance over time.

CAGR is particularly helpful when comparing the growth of different investments or analyzing the historical performance of a single investment. It is calculated using the following formula:
CAGR = (Ending Value / Beginning Value) ^ (1 / Number of Years) - 1
Where:
Ending Value: The final value of the investment after the specified period.
Beginning Value: The initial value of the investment at the start of the period.
Number of Years: The total number of years the investment is held.

To illustrate how CAGR works, consider the following example:
Imagine you invested $1,000 in a mutual fund at the beginning of 2018, and by the end of 2022, the value of your investment has grown to $1,500. To calculate the CAGR:
Beginning Value: $1,000
Ending Value: $1,500
Number of Years: 2022 - 2018 = 4 years
Using the CAGR formula:
CAGR = (1500 / 1000) ^ (1 / 4) - 1
CAGR = (1.5) ^ (0.25) - 1
CAGR ≈ 0.1061 or 10.61%
This means that your investment grew at an average annual rate of approximately 10.61% over the four-year period.

CAGR is advantageous for several reasons:
It provides a clear and simple way to compare the performance of different investments.
It smooths out the volatility and fluctuations in returns that may occur from year to year.
It allows investors to set realistic expectations for future growth based on historical performance.

However, it is essential to keep in mind that CAGR does not reflect the investment's actual performance in any given year, nor does it account for external factors such as market conditions or economic downturns. 

Therefore, while CAGR is a useful tool for assessing growth, it should be used alongside other metrics and qualitative factors when making investment decisions.
For further reading and a deeper understanding of CAGR, consider the following references:
Investopedia - Compound Annual Growth Rate (CAGR)
Forbes - Understanding CAGR