XIRR Calculator
Calculate the returns on investments with irregular cash flows.
XIRR Calculation
XIRR (Extended Internal Rate of Return) is a financial metric that calculates the annualized return on investments with multiple cash flows occurring at irregular intervals. Unlike CAGR which only considers the starting and ending values, XIRR accounts for every transaction — each SIP installment, partial withdrawal, dividend reinvestment, or additional investment.
XIRR is the most accurate way to measure the true return on investments where money flows in and out at different times. It is particularly useful for evaluating SIP returns, real estate investments with periodic rent, or any portfolio with multiple transactions over time.
How XIRR is Calculated
XIRR solves for the discount rate that makes the net present value (NPV) of all cash flows equal to zero: NPV = 0 = Sum of [Cash Flow / (1 + XIRR)^(days/365)] for all transactions. This is solved iteratively (no closed-form solution). Each cash flow is weighted by when it occurred, giving a time-weighted annual return. Inflows are negative (money invested) and outflows are positive (money received).
When to Use XIRR vs CAGR
Use CAGR when you have a single lumpsum investment and a single final value. Use XIRR when you have multiple transactions: SIP investments, partial redemptions, dividend payouts, additional purchases, or any combination. For example, if you invest $500/month for 5 years and redeem all at once, XIRR gives the true annualized return accounting for each $500 installment's individual holding period.
Frequently Asked Questions
What is a good XIRR for mutual fund SIP?
For equity mutual fund SIPs over 10+ years, an XIRR of 12-15% is considered good. Large-cap equity SIPs have historically delivered 10-14% XIRR, mid-cap 12-16%, and small-cap 14-18% over long periods. However, XIRR can vary significantly based on market conditions and the specific time period. Compare your XIRR against the benchmark index's XIRR for a fair evaluation.
Why is my SIP XIRR different from the fund's CAGR?
A fund's reported CAGR is the growth of a single lumpsum invested at the beginning and redeemed at the end. Your SIP XIRR accounts for each monthly installment's individual holding period — early installments have compounded longer than recent ones. In rising markets, XIRR is typically lower than CAGR (because recent installments bought at higher prices haven't compounded as long). In falling markets, XIRR may be higher.
Can XIRR be negative?
Yes, XIRR can be negative, indicating your investment lost money on an annualized basis. This can happen during market downturns or if you invested at market peaks and redeemed during corrections. A negative XIRR doesn't necessarily mean a bad investment if you're still holding — unrealized losses can recover. XIRR should be evaluated over meaningful time periods (5+ years for equity).