What is XIRR?
XIRR, the extended internal rate of return, is the single yearly growth rate that explains every cash flow you made and what your investment is worth today. It is the fairest way to measure SIP returns, because each instalment was invested for a different length of time.
How It Is Worked Out
Find r so that Σ Ck ÷ (1 + r)(dk − d0) ÷ 365 = 0
Each amount C is entered with its date d: money you put in as a negative number, money you got back or the value today as a positive number. The calculator tries rates until the total comes to zero.
Example: you invested ₹1,00,000 on 1 January 2024 and ₹50,000 on 1 July 2024. On 1 January 2026 it is worth ₹1,80,000.
XIRR comes to about 10.4% a year.
XIRR Versus CAGR
CAGR is for one amount from one date to another: ₹1 lakh becoming ₹2 lakh in 6 years is a CAGR of about 12.2%. As soon as there is more than one investment date, use XIRR.