Investments rarely happen on a fixed schedule โ SIP amounts change, you add lumpsums, or withdraw partially. XIRR gives the true annualized return across all these irregular cash flows and dates.
Formula
0 = ฮฃ CFแตข รท (1+XIRR)^(dแตข/365)
Solved iteratively (Newton-Raphson method) since it can't be solved algebraically
Example: Invest โน1,00,000 on 1 Jan 2023, add โน50,000 on 15 June 2023, and the investment is worth โน1,85,000 on 18 July 2026 โ the XIRR works out to approximately 8-9% per year.
XIRR vs CAGR vs Absolute Return
| Metric | Best For | Handles Multiple Dates? |
|---|
| Absolute Return | Simple lumpsum, no time factor | โ No |
| CAGR | Single lumpsum over fixed years | โ No |
| XIRR | SIPs, top-ups, withdrawals | โ
Yes |
If you invested through a SIP (monthly instalments) rather than a single lumpsum, XIRR is the only accurate way to measure your true annualized return.
Frequently Asked Questions
What is XIRR?
XIRR (Extended Internal Rate of Return) is the annualized return of an investment with cash flows happening on irregular dates and amounts โ such as SIPs, lumpsum top-ups, and partial withdrawals.
How is XIRR different from CAGR?
CAGR assumes a single investment growing steadily over a fixed period. XIRR handles multiple cash flows on different dates โ essential for SIPs, top-ups, or any investment with more than one transaction.
Why do I need negative and positive amounts?
Negative represents money leaving your pocket (an investment). Positive represents money coming back to you (withdrawal, redemption, or the current value if you're checking as of today).
What should the last cash flow be?
If you haven't redeemed your investment yet, the last row should be today's date with the current market value as a positive number โ this treats it as if you sold everything today.
Can XIRR be negative?
Yes. A negative XIRR means your investment has lost value on an annualized basis โ common in the short term for equity investments during market downturns.
Is a higher XIRR always better?
Generally yes, but always compare XIRR against a relevant benchmark or index return for the same period โ a 12% XIRR looks great alone but poor if the benchmark returned 18% in that time.
Does XIRR account for taxes?
No. This calculator shows pre-tax returns. Actual post-tax returns will be lower depending on the holding period and applicable capital gains tax rules.
Why does mutual fund XIRR differ from the fund's published CAGR?
The fund's CAGR reflects performance for someone who invested a lumpsum on day one. Your personal XIRR reflects your actual entry dates and amounts โ if you invested during a dip, your XIRR could even exceed the fund's CAGR.
Can I use XIRR for real estate or other illiquid investments?
Yes, as long as you know the exact dates and amounts of every payment (purchase, renovation costs, rental income) and the current or sale value โ XIRR works for any asset with dated cash flows.
How many cash flows can I add?
Add as many as you need โ every SIP instalment, top-up, or partial withdrawal should be its own row for the most accurate XIRR calculation.
This calculator computes XIRR using the Newton-Raphson iterative method, same as Excel's XIRR function. For illustration only โ not investment advice.