What XIRR computes
XIRR — Extended Internal Rate of Return — answers the question: at what annualised rate did my investment actually grow, given the exact dates and amounts of every cashflow?
The mathematical definition: XIRR finds the rate r that satisfies the equation
Σ CF_i / (1 + r)^(t_i / 365) = 0
where CF_i is each cashflow (negative for outflows, positive for inflows) and t_i is the number of days elapsed since the first cashflow date.
This is the same equation used by Excel’s XIRR function and by SEBI’s mutual fund return-disclosure standards for reporting investor returns.
XIRR vs CAGR
| Metric | Works for | Limitation |
|---|---|---|
| Absolute return | Any | No time dimension — 50% over 5yr ≠ 50% over 1yr |
| CAGR | Single lumpsum, single exit | Only two cashflows at two dates |
| XIRR | Any number of cashflows at any dates | Requires both buys and sells |
The key practical difference: if you ran a ₹10,000/month SIP for 3 years and then redeemed, the “total invested” is ₹3.6L and the maturity value might be ₹4.5L — but the CAGR formula gives you a misleading 25% because it ignores that the first instalment was invested for 3 years while the last was invested for just 1 month. XIRR correctly weights each cashflow by its actual holding period and gives the true annualised return.
How to use the row-based input
- Each row = one event in your investment history.
- Negative amounts = money leaving your account (SIP instalment, lumpsum purchase, additional top-up).
- Positive amounts = money returning to your account (partial redemption, full redemption, dividend received in cash).
- For an ongoing investment you haven’t redeemed yet: add a final row with today’s date and the current market value of your holding as a positive number. This gives you the XIRR as of today.
- Use Add row to add as many cashflows as needed. Use the × button to remove a row.
Important: at least one negative and one positive cashflow are required — otherwise there is no rate that satisfies the equation and the calculator will show a convergence warning.
Convergence and edge cases
The Newton-Raphson solver starts from a 10% initial guess and refines over up to 100 iterations until the rate change falls below 1×10⁻⁷ (tolerance). For typical mutual fund patterns this converges in under 20 iterations.
Patterns that may not converge:
- All-negative (all buys, no sells) — mathematically undefined XIRR
- All-positive (all sells, no buys) — same problem
- Extremely tiny amounts (sub-rupee) — numerical precision issues
- Unusual alternating large positive/negative flows — multiple roots possible
If the calculator shows “Could not converge”, check that you have at least one negative and one positive cashflow, and that the amounts are reasonable (≥ ₹1 per row).
Note: A rate floor of −99% is applied to prevent the Newton-Raphson solver from diverging into negative territory below which the formula becomes undefined.
Worked examples
Example 1 — SIP-like pattern
| Date | Amount | Note |
|---|---|---|
| 2024-01-01 | −10,000 | Month 1 SIP |
| 2024-02-01 | −10,000 | Month 2 SIP |
| 2024-03-01 | −10,000 | Month 3 SIP |
| … (12 rows) | −10,000 each | Monthly SIPs |
| 2025-12-31 | +1,50,000 | Final redemption |
Result: XIRR ≈ 19–21% (depends on exact redemption value). Total invested ₹1.2L, redeemed ₹1.5L.
Example 2 — Simple lumpsum
| Date | Amount |
|---|---|
| 2024-01-01 | −1,00,000 |
| 2025-01-01 | +1,10,000 |
Result: XIRR ≈ 10.0%. This matches CAGR exactly because there are only two cashflows.
Example 3 — Multi-buy multi-sell
| Date | Amount | Note |
|---|---|---|
| 2022-04-01 | −50,000 | First buy |
| 2023-01-01 | −30,000 | Top-up |
| 2023-10-15 | +40,000 | Partial redemption |
| 2024-07-01 | −20,000 | Additional buy |
| 2025-03-31 | +75,000 | Final redemption |
Result: XIRR correctly weights each cashflow by its exact holding period — something neither CAGR nor simple absolute return can handle.
Bridges
- SIP calculator — project expected SIP maturity using a constant return rate
- Lumpsum calculator — point-to-point CAGR projection for a single investment
- SWP calculator — plan systematic withdrawals from a corpus; each withdrawal is an inflow in XIRR
- LTCG equity calculator — compute tax on the gains reflected in your XIRR inflows