Extended Internal Rate of Return Calculator for Irregular Cash Flows
Professional-grade tool for calculating annualized returns on Systematic Investment Plans (SIPs), mutual funds, venture capital, and investments with multiple transactions
XIRR (Extended Internal Rate of Return) is the annualized rate of return for investments where multiple cash flows occur at irregular intervals. Unlike simpler metrics, XIRR accounts for the exact timing of each transaction, providing a true measure of investment performance for real-world scenarios like SIPs, mutual funds with additional top-ups, or venture capital investments[citation:6].
Key Insight: XIRR is your personalized rate of return. Two investors in the same mutual fund can have completely different XIRRs based on when they invested or withdrew money[citation:6].
Mathematically, XIRR is the discount rate that makes the Net Present Value (NPV) of all cash flows equal to zero[citation:5]. It's calculated using the formula:
Σ [Pi / (1 + r)^((di - d1)/365)] = 0
Where:
Microsoft Excel's XIRR function uses this formula with an iterative calculation method, cycling through rates until the result is accurate within 0.000001%[citation:1].
For monthly SIP investments where you invest ₹10,000 every month for 3 years (total investment = ₹3,60,000), with a final value of ₹4,20,000, XIRR would be approximately 9.8% per annum[citation:6]. This accurately reflects that your first investment had 36 months to grow while your last investment had only 1 month.
Investors making staged investments in startups can use XIRR to calculate their true annualized return across multiple funding rounds and eventual exit proceeds, even when investments and returns happen at completely irregular intervals.
If you occasionally add lump sums to your investments or make partial withdrawals, XIRR provides the true annualized return that accounts for these timing differences, unlike absolute return calculations[citation:9].
For properties with irregular rental income, renovation expenses, and eventual sale, XIRR calculates the true annualized return considering all cash inflows and outflows at their specific dates.
| Metric | Best For | Limitations | Example Use Case |
|---|---|---|---|
| XIRR | Multiple/irregular investments & withdrawals | Requires exact dates of all transactions | SIPs, venture capital, dividend reinvestment plans |
| CAGR | Single lump-sum investments | Cannot handle multiple cash flows | One-time investment held for several years |
| Absolute Return | Simple percentage gain calculations | Ignores time value of money and investment duration | Short-term trades under 1 year |
| IRR | Regular periodic cash flows | Requires equal time periods between cash flows | Monthly annuity payments, regular dividends |
Professional Insight: "If CAGR tells the story of one race, XIRR tells the story of every step you took along the way." While CAGR measures the growth of one tree you planted once, XIRR measures the growth of an entire garden you've been nurturing irregularly over time[citation:6].
Consider a 6-month SIP with ₹5,000 invested monthly, redeemed for ₹31,000 on July 1, 2017[citation:9]:
Dates: 01/01/2017, 03/02/2017, 01/03/2017, 11/04/2017, 01/05/2017, 25/06/2017, 01/07/2017
Cash Flows: -5000, -5000, -5000, -5000, -5000, -5000, 31000
Excel Formula: =XIRR(B1:B7, A1:A7)
Result: 11.92% XIRR
For investments with both inflows and outflows at irregular intervals[citation:5]:
07/08/2016: -100,000 (Initial investment)
07/08/2018: +50,000 (Partial withdrawal)
07/08/2019: +30,000 (Dividend payment)
07/08/2020: -20,000 (Additional investment)
07/08/2021: +130,000 (Final redemption)
XIRR Result: 18.21%
XIRR (Extended Internal Rate of Return) is the annualized rate of return for investments with multiple, irregular cash flows occurring at different times. Use it for SIPs, mutual funds with additional top-ups, venture capital, or any scenario where you invest or withdraw money at irregular intervals[citation:6][citation:9].
CAGR calculates returns for a single investment made once. XIRR handles multiple investments/withdrawals at different times. CAGR is for lump-sum investments; XIRR is for SIPs, systematic transfers, or irregular cash flows where timing matters significantly[citation:6].
Yes, XIRR can be negative. A negative XIRR indicates your investment has lost money overall, considering all cash inflows and outflows. The current portfolio value is less than the total amount invested when accounting for the time value of money[citation:6].
A 15% XIRR means your investments have generated an annualized return of 15%, considering the specific timing and amounts of all your transactions. It's the constant annual rate that would give you your current portfolio value from your series of irregular investments[citation:2][citation:9].
Negative values represent money going OUT of your pocket (investments, purchases). Positive values represent money coming IN (redemptions, dividends, final value). This convention aligns with standard financial modeling where outflows are negative and inflows are positive[citation:1][citation:5].
Common errors include: missing the minus sign for investments, dates not in chronological order, inconsistent date formats, not having at least one negative and one positive cash flow, and dates preceding the starting date[citation:1][citation:2].
Our XIRR calculator uses the same iterative algorithm as Microsoft Excel, accurate within 0.000001%. It matches professional financial software results for all practical investment scenarios[citation:1][citation:2].