What is XIRR?
XIRR stands for Extended Internal Rate of Return. It is the single yearly rate of return that makes the present value of all your cash flows (investments and redemptions) equal to zero. In simple words, XIRR tells you the actual yearly return you earned when money went in and came out at different times.
XIRR is the correct way to measure SIP returns because every SIP installment stays invested for a different period. CAGR only works when there is one investment and one redemption.
How to use the XIRR calculator
- Select the investment frequency: 14 days, monthly, quarterly, half yearly or yearly.
- Enter the start date of the investment and the maturity (or redemption) date.
- Enter the recurring investment amount, that is the amount invested on every date.
- Enter the total maturity amount you received or the current value of the investment.
- The calculator builds the cash flows for you (each investment as an outflow and the maturity amount as an inflow) and shows your XIRR with a year-wise wealth projection chart.
XIRR formula
XIRR solves the following equation for the rate r:
Σ CFᵢ / (1 + r)^(dᵢ / 365) = 0
- CFᵢ = each cash flow (negative for investment, positive for withdrawal)
- dᵢ = number of days between the first cash flow and cash flow i
- r = XIRR (yearly return)
There is no direct formula to find r, so the calculator uses a numerical method (Newton-Raphson) to solve the equation, just like the XIRR function in Excel.
Example: Investing ₹10,000 every year from 1 January 2021 to 1 January 2024 (three installments, ₹30,000 invested) and receiving ₹60,000 on the maturity date gives an XIRR of about 38.92%.
XIRR vs CAGR vs absolute return
| Measure | Use when | Considers time? |
|---|---|---|
| Absolute return | Period is less than one year | No |
| CAGR | One investment, one redemption | Yes |
| XIRR | Multiple investments or withdrawals on different dates (SIP, SWP) | Yes |
Frequently asked questions
Why is XIRR used for SIP returns?
In a SIP, every installment is invested on a different date and stays invested for a different time. XIRR accounts for the exact date of each cash flow and gives a single yearly return.
What is a good XIRR for mutual funds?
For equity mutual funds, an XIRR of 12% or more over 5 years or longer is considered good. For debt funds, 6% to 8% is normal.
Can XIRR be negative?
Yes. If the total value received is less than the total invested, XIRR will be negative, showing a loss.
Is XIRR the same as Excel XIRR?
Yes. This calculator uses the same method as the XIRR function in Microsoft Excel and Google Sheets.
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View allDisclaimer: This calculator is for information purposes only. Results are estimates based on the inputs you provide and do not guarantee any returns. Please consult a qualified financial advisor before making investment or tax decisions.