What is XIRR?
XIRR stands for Extended Internal Rate of Return. It is the single annualised rate of return that, when applied to each individual investment on its specific date, makes the total present value of all cash flows equal to zero. In simpler terms, XIRR tells you how much your money grew per year on average, after accounting for the exact timing of every investment you made.
XIRR is the standard measure used by mutual fund houses, CAMS, KFintech, and stock brokers in India to show portfolio returns. When your broker or mutual fund app displays your SIP return percentage, that figure is always calculated using XIRR, not CAGR. Understanding this distinction is important because using CAGR for a SIP portfolio gives a misleading result.
How can this XIRR calculator help you?
This calculator is designed for investors who want to evaluate the actual return on their SIP or recurring investment portfolio. It accepts four inputs: the amount invested per instalment, the investment frequency, the total duration, and the current portfolio value. The XIRR is then computed instantly using the Newton-Raphson method, which is the same algorithm used by Microsoft Excel.
The XIRR formula
XIRR is the value of rate r that satisfies the following equation:
Σ [Cⅰ / (1 + r) ^ ((dⅰ - d₀) / 365)] = 0
The variables represent the following:
| Variable | Meaning |
|---|---|
| r | XIRR — the annualised rate being solved for |
| Ci | The cash flow amount at period i (negative for investments, positive for the final value) |
| di | The date of cash flow i |
| d0 | The date of the first cash flow (start of the investment) |
There is no closed-form solution for r when there are more than two cash flows. The equation must be solved iteratively. Excel and this calculator use the Newton-Raphson method, which converges to the answer in a few hundred iterations.
Worked example of XIRR calculation
Suppose an investor makes three yearly investments of Rs. 10,000 beginning on 1 January 2021, and receives Rs. 60,000 on 1 January 2024. The cash flows are:
| Date | Cash Flow | Type |
|---|---|---|
| 01 Jan 2021 | Rs. 10,000 | Investment (outflow) |
| 01 Jan 2022 | Rs. 10,000 | Investment (outflow) |
| 01 Jan 2023 | Rs. 10,000 | Investment (outflow) |
| 01 Jan 2024 | Rs. 60,000 | Maturity amount (inflow) |
Total invested is Rs. 30,000. Final value is Rs. 60,000. Absolute return is 100 percent. The XIRR for this scenario works out to approximately 39 percent per annum. The high XIRR reflects the fact that the earliest investment of Rs. 10,000 had only three years to grow, while the last investment had only one year. Each instalment contributed differently based on when it was deployed.
XIRR in Excel: =XIRR({B2:B5}, {C2:C5}) where B2:B5 = {10000, 10000, 10000, -60000} and C2:C5 are the four dates above.
XIRR versus CAGR
CAGR measures the annualised return between two fixed points in time for a single investment. If Rs. 1 lakh grew to Rs. 2 lakh in 5 years, the CAGR is 14.87 percent per annum. This is straightforward when there is only one initial cash flow.
For a SIP, using CAGR produces an incorrect result. If you invested Rs. 5,000 per month for 5 years and your portfolio is now worth Rs. 4 lakh, a naive CAGR calculation treating Rs. 3 lakh as the starting amount and Rs. 4 lakh as the end would give a misleading figure. The first instalment had 5 years to compound, but the last instalment was deployed just one month ago. XIRR accounts for every single instalment date, making it the accurate measure for SIP returns.
| XIRR | CAGR | |
|---|---|---|
| Designed for | Multiple cash flows at different dates | Single lumpsum investment |
| Accounts for timing | Yes — each cash flow dated precisely | No — single start and end date |
| Used for SIP returns | Yes — the correct measure | No — gives inaccurate result |
| Used for lumpsum returns | Works but same as CAGR | Yes — the standard measure |
| Solvable by hand | No — requires iteration | Yes — simple formula |
When should you use XIRR?
SIP and recurring investments
Use XIRR whenever you are evaluating a portfolio built through regular investments over time. Monthly SIPs, quarterly contributions, or any recurring investment plan requires XIRR to measure returns accurately. Our SIP Calculator uses the XIRR-equivalent formula internally to project returns.
Checking your mutual fund portfolio return
When your fund house or broker app shows your portfolio return as a percentage, that number is XIRR. To verify or recalculate it independently, enter the total amount invested per instalment, the frequency, the duration, and your current portfolio value into this calculator.
Comparing two SIP investments
If you want to compare two funds where you made the same SIP amount and duration but received different final values, XIRR gives you a like-for-like annualised return for each, making the comparison accurate.
When to use CAGR instead
Use CAGR when you made a single lumpsum investment at one point in time and want the annualised return up to today or a future date, with no interim investments or withdrawals.
How to calculate XIRR in Microsoft Excel
Excel has a built-in XIRR function that calculates the result directly. The following steps apply to any SIP portfolio:
How to use this XIRR calculator
The calculator requires four inputs:
The XIRR, total gain, absolute return, and donut chart update instantly as you adjust any input. Expand the year-by-year growth table to see how your portfolio compounded at the calculated XIRR rate across each year.