Find the yearly return (XIRR) for an investment made and taken out on specific dates.
Solved numerically using Newton-Raphson iteration, since there's no simple algebraic formula for irregular cash flow dates.
XIRR: The discount rate where the sum of all cash flows, present-valued, equals zero
XIRR, the extended internal rate of return, is the annual rate that makes a set of dated cash flows balance to zero. Mutual fund statements, portfolio trackers and brokers in India report it because real investing is messy: SIPs, top-ups and part withdrawals all happen on different dates.
This calculator handles the simplest case, one investment and one final value separated by a holding period in years. For that case XIRR equals CAGR, and the page lets you see how the idea works before you apply it to a full list of transactions in a spreadsheet.
Anyone reading an account statement that shows an XIRR figure, or trying to compare a SIP with an FD rate, benefits from knowing what the number means.
1. List every cash flow with its date. Money you invest is negative; money you receive, or the current value, is positive.
2. For each flow, find the time from the first date in years: t = days ÷ 365.
3. Write the net present value equation: Σ amountₖ ÷ (1 + r)^tₖ = 0.
4. Guess a rate, for example r = 0.10, and compute the NPV.
5. Improve the guess using Newton-Raphson: r_new = r − NPV(r) ÷ NPV′(r), where NPV′(r) = Σ −tₖ × amountₖ ÷ (1 + r)^(tₖ + 1).
6. Repeat until the rate stops changing. Multiply by 100 for a percentage. In a spreadsheet, the XIRR function does these steps for you.
XIRR asks: at what annual interest rate would a bank account, receiving your deposits and paying your withdrawals on the same dates, end with exactly your current value? If each cash flow is discounted back to the start at that rate, the positives and negatives cancel. This is the same idea as an internal rate of return in project finance, extended to irregular dates. A higher XIRR means your money, on average, grew faster for the time it was actually invested.
With one investment and one final value, the equation −P + V ÷ (1 + r)ᵗ = 0 solves directly to r = (V ÷ P)^(1/t) − 1, which is the CAGR formula. With three or more flows at different times, the equation becomes a polynomial in (1 + r) with fractional powers and has no general closed-form solution. Newton-Raphson starts from a guess, uses the slope of the NPV curve to jump towards the zero, and usually converges in a few steps. This calculator counts years as 365-day periods, the same convention spreadsheet XIRR functions use.
A three-year SIP with a 20% absolute return might show an XIRR of around 12%. The XIRR is higher than 20% ÷ 3 because the average rupee was invested for only about half the period. This is why XIRR, not absolute return, is the right number to compare a SIP with an FD rate or with a fund's published returns. XIRR can mislead over very short periods, where a small gain over a few weeks annualises to an extreme figure, and it can behave oddly when flows change sign many times.
Imran invested ₹2,00,000 in a mutual fund as a single lump sum four and a half years ago, and his statement now values it at ₹3,12,000.
Answer: XIRR 10.39%
Entering the investment as a positive number in a spreadsheet, which gives no answer or a wrong one.
Leaving out the current value as the final positive cash flow.
Trusting an XIRR over a holding period of a few weeks.
Comparing XIRR on one fund with absolute return on another.
Forgetting dividend payouts or partial withdrawals, which are cash flows too.
Reading the XIRR figure in a mutual fund consolidated account statement.
Comparing a SIP's real performance with an FD or PPF rate.
Measuring returns on a portfolio with several top-ups and withdrawals.
Evaluating real estate or business investments with irregular cash flows.
How is XIRR different from CAGR?
For a single investment put in and taken out once, they give the same answer. XIRR's advantage is that it can handle several payments on different dates — like a SIP with extra top-ups — which CAGR cannot do.