The XIRR Calculator is a free online tool which enables you to calculate the annualised return from your investment made at various dates such as SIP, Top-up and redemption. You don't need to do the maths by hand to calculate your annualised rate of return; just enter your cash flows and the date, and the tool will return an accurate annualised rate of return. This calculator gives you peace of mind when you're keeping track of your investment with a mutual fund SIP, a paced stock investment plan or any investment that does not follow a fixed SIP pattern.
What is XIRR (Extended Internal Rate of Return)?
Extended Internal Rate of Return (XIRR) is an acronym for Extended Internal Rate of Return. It finds the single annualised rate which balances a series of cash inflows and outflows occurring at a different time.
Why a simple CAGR doesn't work for SIPs
CAGR is based on a single investment, and the investment is assumed to be made in a lump sum and invested for a fixed number of periods. However, if you invest through SIPs, every SIP in goes at a different time and every SIP will increase by a different period. You can't use CAGR over here as it is not an accurate measure of the returns you got because it doesn't take into account the timing of each contribution.
The intuition behind XIRR
The ROIXIRR handles this by calculating the ROI for each individual cash flow, and weighting it according to the length of time it has been invested. The result is one rate, which state your actual time weighted rate based on the actual returns from all transactions, not only the initial and final rates.
XIRR Formula Explained
The mathematical formula
The basic idea behind XIRR is that the sum of all the discounted cash flows at the XIRR rate is equal to zero:
0 = Σ [Cashflow𝑖 ÷ (1 + XIRR)^((d𝑖 − d₀)/365)]
In this case, each cash flow will have its own actual date and d₀ will be your reference start date. The negative values are used for investments and positive for redemption or current value.
How the calculator solves it
This equation cannot be solved algebraically, so the calculator uses an iterative numerical technique (usually Newton's method) to find the rate which is a solution of the equation. This occurs in the background without any delay, only seeing the percentage at the end.
How to Use the XIRR Calculator
Step-by-step input guide
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Input all the amounts of transactions; investments are negative while redemption and/or withdrawals are positive.
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Record exact date of each transaction.
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Then make an additional row with the value of your investment today (as a positive value).
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To calculate the annualised XIRR, click on calculate.
Common input mistakes
Any mistake in signs or date will drastically affect the outcome. Ensure that all investments are entered as a negative number, all redemption amounts and final amounts are entered as positive numbers and that dates are not entered in reverse order, or that they are not entered more than once or missing.
XIRR vs CAGR vs IRR — Key Differences
When to use XIRR
If you have several investment transactions on varying dates, like SIPs, partial stock trades or if you have a portfolio adding in and withdrawing stocks every now and then, use XIRR.
When to use CAGR instead
CAGR is more appropriate for a single, lump-sum capital investment with a single start date and a single end date for the period—that is, no additional investments or withdrawals take place during the investment period. The term IRR, on the other hand, is a general term — XIRR basically is IRR but it is adjusted to work with cash flows that occur on irregular calendar dates not evenly spaced.
Worked Example: Calculating XIRR for a SIP
Sample cash flow table
If you invested ₹10,000 every month for 12 months and the investment was valued at ₹1,35,000 after one year, what was the rate of return on your investment?If the investment amount is ₹1,35,000 after 1 year, with an initial investment of ₹10,000 every month for 12 months, what is the rate of return on the investment? Each of the cash flows of ₹10,000 is recorded as a negative cash flow on the date paid and the last cash flow of ₹1,35,000 is recorded as a positive cash flow on the closing date.
Interpreting the result
Plugging this into the calculator yields an XIRR, which is about 15% in this case, based on the precise dates (mid to high teens range for this example). This is a much more significant figure than just a ratio of "total gain/total invested" as this ratio takes into consideration the time for which each rupee was invested.
Benefits of Using an Online XIRR Calculator
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Get the correct, formula-based return number in seconds, rather than calculating manually, which can be prone to calculation errors.
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Look at the XIRR on your mutual fund/brokerage statement and match it against the figures shown here.
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Calculate returns for any SIPs, lumpsum investments and portfolios with varying cash flows and compare the results.
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Run various scenarios in a moment, change quantities or dates and see the results.
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Never requires registration and is available for mobile and desktop.
Things to Keep in Mind Before Relying on XIRR
XIRR is as reliable as the input that you give it, a single day or sign off can affect the entire result. It also makes the assumption of a fixed rate of return for the time period, which is not always the case in the real markets. Use your XIRR figure to keep your plans on track, but not as hard facts: be sure to seek the advice of a trusted financial professional at thetopstockbroker for substantial amounts of money or tax planning.
Please note that this XIRR calculator is for information and education only and is not an investment, tax or financial advice.