What is XIRR?
XIRR (Extended Internal Rate of Return) is the annualised return on an investment where cash flows happen at irregular intervals. It's the standard metric for measuring the performance of SIPs, mutual funds, stock portfolios, and any scenario where you add or withdraw money over time.
Unlike simple averages or absolute return, XIRR weights every cash flow by the exact number of days it stayed invested. That makes it the most honest single-number return for real-world portfolios — and the same formula Microsoft Excel and Google Sheets use under the hood.
How to Calculate XIRR
- List every investment you made with its date (enter as a negative amount).
- Add every redemption or current portfolio value with its date (positive).
- Make sure there's at least one positive and one negative value.
- The calculator finds the discount rate that makes the net present value zero.
- That rate, annualised, is your XIRR.
In Excel the formula is =XIRR(values, dates, [guess]). Our tool replicates this with Newton-Raphson iteration and a bisection fallback for hard-to-converge cases.
XIRR vs CAGR
| Aspect | CAGR | XIRR |
|---|---|---|
| Cash flows | Single lump sum | Multiple, irregular |
| Best for | One-time investments | SIPs, top-ups, withdrawals |
| Accuracy on SIPs | Misleading | Mathematically correct |
| Excel function | Manual formula | =XIRR() |
| Handles dates | No | Yes (to the day) |
Example Calculation
Suppose you invested $500/month for 36 months into a US index fund, and your portfolio is worth $21,500 today. You invested $18,000 total, so the absolute return is +19.4%. But because some of that money was only invested for a few months, the annualised return is what matters.
Plug those 37 cash flows into the calculator above and you'll see an XIRR of roughly 11.8% — significantly higher than the 6.5% you'd naively compute from total return ÷ years. That's the SIP magic XIRR captures.
Why XIRR Matters for Investors
If you're comparing two mutual funds, two brokerages, or your own portfolio against the S&P 500, XIRR is the only fair way to do it. Absolute return ignores time. Average return double-counts. CAGR breaks the moment you do a top-up. XIRR is bulletproof.
For retail investors in the US and UK, calculating XIRR used to mean wrestling with Excel. This tool does it instantly, on any device, with the charts and exports you need to share with an advisor or just track your own progress.