XIRR

Full form: Extended Internal Rate of Return

Investments

XIRR is the accurate annualised return for investments with irregular cash flows like SIPs. Unlike CAGR (for single lumpsum), XIRR accounts for the exact dates and amounts of each SIP installment to compute the true annualised return on your actual investment pattern.

In detail

Why XIRR is needed for SIPs:nIf you invest Rs 1,000/month for 10 years and the final value is Rs 2L, CAGR on total invested (Rs 1.2L) would be 5.7% -- wrong. The first Rs 1,000 invested for 10 years contributes differently than the last Rs 1,000 invested for 1 month.nnXIRR calculates the single interest rate that makes all cash outflows (SIP installments as negative) and inflows (final redemption as positive) balance to zero -- the true return on your actual cash flow.nnUseful for: SIP returns, rental property returns (irregular rents plus sale), business investments.

Formula

XIRR is the rate r that makes: sum of [Cash flow_i / (1+r)^(days_i/365)] = 0nCalculated via iteration. Available in: Excel (=XIRR function), Google Sheets, Kuvera, Groww dashboards.

Real-life example

🇮🇳 India example

Priya invested Rs 5,000/month SIP for 5 years (Rs 3L total). Current value Rs 4.8L. CAGR on total = 9.7% (misleading). XIRR = 14.2% (accurate). The later installments were invested for shorter periods, so XIRR correctly shows the weighted return. Most MF platforms show XIRR in your portfolio dashboard.

Frequently asked questions

How do I calculate XIRR in Excel? ▼

Create two columns: dates (all SIP dates as negative amounts, final redemption date as positive amount). Use =XIRR(values_range, dates_range). Enter SIP amounts as negative (-5000) and final value as positive (+480000). Result is your annualised SIP return.