Calculate the Extended Internal Rate of Return (XIRR) for your investments with irregular cash flows. XIRR gives you the true annualized return of your portfolio, accounting for the exact timing and amount of each transaction.
Calculate the Extended Internal Rate of Return (XIRR) for your investments with irregular cash flows.
XIRR (Extended Internal Rate of Return) is a financial function that calculates the internal rate of return for a series of cash flows that occur at irregular intervals. Unlike regular IRR, XIRR can handle investments and returns that don't happen at regular periods.
When to use XIRR:
How to interpret XIRR:
XIRR (Extended Internal Rate of Return) is a financial metric used to calculate the annualized return of an investment that involves multiple cash flows occurring at irregular intervals. Unlike simple return or CAGR calculations, XIRR accounts for the exact timing of each investment and withdrawal.
This makes XIRR the most accurate way to measure the performance of investments like SIPs (where you invest monthly), partial withdrawals, additional top-ups, or any portfolio with multiple transactions over time.
XIRR is the rate (r) that makes the Net Present Value (NPV) of all cash flows equal to zero:
NPV = ∑ [C_i / (1 + r)^((d_i - d_0) / 365)] = 0
Where:
Since this equation cannot be solved algebraically, XIRR is calculated using an iterative numerical method (Newton-Raphson) to find the rate that brings the NPV closest to zero.
Consider the following investment scenario:
| Date | Cash Flow | Description |
|---|---|---|
| Jan 1, 2020 | -1,00,000 | Initial investment |
| Jul 1, 2020 | -50,000 | Additional investment |
| Jan 1, 2021 | -50,000 | Additional investment |
| Jan 1, 2023 | +3,00,000 | Redemption / Current value |
In this case, the total invested was Rs. 2,00,000 and the redemption value was Rs. 3,00,000. The XIRR would be approximately 16.5%, representing the annualized return accounting for the timing of each cash flow.
| Metric | Best For | Limitation |
|---|---|---|
| XIRR | Multiple irregular cash flows (SIPs, partial redemptions) | Requires exact dates for each transaction |
| CAGR | Single lumpsum investment with one exit | Ignores intermediate cash flows |
| Absolute Return | Simple percentage gain/loss | Does not account for time or compounding |
Use XIRR whenever you have multiple investments or withdrawals at different times. CAGR only works accurately for a single lumpsum investment held for a period. For SIPs or any portfolio with multiple transactions, XIRR is the correct metric.
Enter today's date with a positive cash flow equal to your current portfolio value. This represents a hypothetical redemption and allows the calculator to determine your return.
An XIRR of 12-15% is generally considered good for equity mutual funds over a 5+ year period. However, returns vary based on market conditions and the specific fund. Debt funds typically show 6-9% XIRR.
Yes, a negative XIRR means your investment has lost value. This can happen during market downturns or if you invested in a poorly performing fund.
This XIRR calculator is for informational and educational purposes only. The results are mathematical computations based on the cash flows you provide and do not constitute financial advice. XIRR calculations assume reinvestment at the computed rate. Actual investment performance may differ. Please consult a certified financial advisor for personalized investment guidance.