XIRR Calculator

What Is XIRR (Extended Internal Rate of Return)?

The Extended Internal Rate of Return (XIRR) is a standard metric used to calculate the annualized rate of return for a series of cash flows occurring at irregular or regular intervals. Unlike Simple CAGR (which only looks at the initial and final values), XIRR accounts for the exact timing and amount of every single transaction.

For systematic investment plans (SIPs), recurring deposits, or multi-installment equity portfolios, XIRR is the most accurate method to measure real portfolio performance because it gives time-weighted importance to each deposit.

Example: XIRR on a Recurring Investment

Here is a reference table demonstrating the calculated XIRR for a recurring monthly investment of $5,000 over different timeframes and maturity outcomes:

Monthly Deposit	Start Date	Maturity Date	Maturity Value	Calculated XIRR (%)
$5,000	2023-01-01	2024-01-01	$64,000	12.60%
$5,000	2023-01-01	2025-01-01	$135,000	11.23%
$5,000	2020-01-01	2025-01-01	$380,000	9.64%
$5,000	2023-01-01	2024-01-01	$55,000	-15.02%

These examples illustrate that XIRR adapts to both gains and losses based on the real time duration of the investment.

XIRR Formula

To compute XIRR, we solve for the rate r that satisfies the Net Present Value (NPV) equation of all cash flows set to zero:

$$\sum_{i=1}^{N} \frac{C_i}{(1 + r)^{\frac{d_i - d_1}{365}}} = 0$$

Where:

• $C_i$ = the amount of the $i$-th cash flow (investments are entered as negative values, while final maturity or redemptions are positive values).
• $d_i$ = the date of the $i$-th cash flow.
• $d_1$ = the date of the first cash flow (Start Date).
• $r$ = the annualized rate of return (XIRR).
• $N$ = the total number of transactions including the maturity payout.

Why XIRR Requires a Numerical Solver

Because r is raised to varying fractional exponents depending on the number of days between dates, this equation cannot be solved algebraically. Instead, financial tools use numerical approximation algorithms:

1. Newton-Raphson Method: An iterative solver using the function's derivative to quickly converge on the root of the equation.
2. Bisection Method: A fallback search algorithm that repeatedly cuts an interval in half to locate the rate when Newton-Raphson encounters convergence limits.

XIRR vs CAGR: Why Timing Matters

CAGR assumes your entire investment was made in one lump sum at the very start and held untouched until the end — it only looks at the beginning value, the ending value, and the number of years between them. XIRR instead accounts for the exact date and amount of every individual cash flow, which makes it the correct metric whenever money goes in (or comes out) at more than one point in time.

Here's why this matters in practice: if you invest a fixed amount every month for two years, your first contribution has had the full two years to compound, but your final contribution has had almost no time at all. CAGR can't see this difference — it would either need you to collapse everything into a single "total invested" figure (losing all timing information) or it would misrepresent your actual return. XIRR correctly gives more weight to money that's been invested longer and less weight to money invested recently, producing a rate of return that reflects what you actually experienced.

Rule of thumb: use CAGR for a single lump-sum investment made once and held for a fixed period. Use XIRR for any investment involving multiple contributions (or withdrawals) at different times — SIPs, recurring deposits, or a portfolio built up gradually rather than all at once.

How to Read Your XIRR Result

• Positive XIRR — your investment has generated a real annualized gain once the timing of every contribution is accounted for.
• XIRR near your expected fund return — a strong sign your investment timing (e.g., regular monthly SIP dates) hasn't meaningfully helped or hurt you relative to the underlying fund's own performance.
• Negative XIRR — the investment has lost value on an annualized, time-weighted basis; this can happen even if some individual contributions are currently "in profit," if the overall timing and final value work out unfavorably.

A single XIRR figure summarizes the entire investment history into one annualized rate, so it's most meaningful when compared against a relevant benchmark (a market index, a target return, or the fund's own stated historical return) rather than judged in isolation.

What Is a Good XIRR?

A good XIRR depends on the asset class and market conditions. For long-term equity mutual fund investments in growing markets, an XIRR of 12% to 15% is generally considered strong, while debt funds typically target 6% to 8%.

XIRR vs Absolute Returns

Absolute return simply measures total gain as a percentage of total invested (final value ÷ total invested − 1), with no regard for how long the money was invested. Two investments can have identical absolute returns but very different XIRRs if one achieved that return in 2 years and the other took 10 — XIRR annualizes the outcome so returns achieved over different time periods can be fairly compared, while absolute return cannot make that distinction on its own.