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Formulas & Methodology

XIRR Calculator

Calculate the annualized return for irregular investments with dates. Use negative numbers for investments/outflows and positive numbers for redemptions/current value.

Cash Flows (Date & Amount)

Convention

Enter cash outlays (investments) as negative numbers (e.g. -100000) and returns or current portfolio valuation as positive numbers (e.g. 185000).

Results

Extended Internal Rate of Return
19.71%

Equivalent to roughly ~₹1,971/year for every ₹10,000 invested

Total Invested (Outflows)₹1,50,000
Total Received/Value (Inflows)₹2,05,000
Net Absolute Profit₹55,000
Total Cash Flows4 events

For information only. Not financial advice. Results are estimates.

How the XIRR calculator works

The Extended Internal Rate of Return (XIRR) measures the annualized performance of an investment portfolio that experiences irregular deposits, sporadic withdrawals, or fluctuating dividend payouts. Unlike the standard Internal Rate of Return (IRR) which assumes cash flows arrive at uniform annual or monthly intervals, XIRR calculates the exact fractional day count for every individual transaction.

XIRR uses the Newton-Raphson numerical iterative method to discover the discount rate r that sets the Net Present Value (NPV) of all historic cash flows to exactly zero:

NPV = Σ [ Ci / (1 + r)(di − d0) / 365 ] = 0

  • Ci — Cash flow amount at event i (negative for outflows/investments, positive for inflows/redemptions)
  • di — Date of transaction i
  • d0 — Date of the initial transaction
  • r — Annualized internal rate of return (XIRR)

Worked example: 4 irregular cash flow events

Consider an investor managing an active portfolio over a two-year period with the following transactions:

DateNature of FlowAmountElapsed Days
2023-01-01Initial Investment (Outflow)-₹1,00,0000 days
2023-07-01Follow-on Investment (Outflow)-₹50,000181 days
2024-01-01Partial Profit Booking (Inflow)+₹20,000365 days
2025-01-01Current Valuation (Terminal Inflow)+₹1,85,000731 days

1. Aggregate Cash Outlays: ₹1,00,000 + ₹50,000 = ₹1,50,000

2. Aggregate Recoveries & Valuation: ₹20,000 + ₹1,85,000 = ₹2,05,000

3. Net Absolute Gain: ₹2,05,000 − ₹1,50,000 = ₹55,000 (+36.67% absolute return)

4. Newton-Raphson Solving: Finding discount rate r such that NPV = 0:

-100000 + [-50000 / (1 + r)0.496] + [20000 / (1 + r)1.000] + [185000 / (1 + r)2.003] = 0

5. Resulting Annualized Return: XIRR = 19.71%

Interpreting your XIRR results

Money-Weighted Rate of Return: XIRR is fundamentally a money-weighted return metric. It is sensitive to both the magnitude and the timing of your deposits. Deploying large sums just before an asset surge boosts your XIRR, while investing right before a correction depresses it.

Distortion Over Short Horizons: Because XIRR annualizes all rates, short holding durations can produce misleadingly high numbers. For instance, making 3% profit over 5 days equates to an annualized XIRR exceeding 700%, even though the actual cash gain was modest. Always evaluate XIRR alongside the net absolute monetary gain.

Wondering how XIRR compares to CAGR? For a single lump-sum investment, XIRR is mathematically identical to CAGR. To understand how timing alters returns across SIPs vs lump sums, read our deep dive on CAGR vs. XIRR or use the CAGR Calculator.

Key assumptions and limitations

  • Reinvestment Rate Assumption: Mathematically, XIRR presumes that all intermediate positive cash flows (such as dividend payouts) are reinvested in instruments earning the same internal rate of return until the terminal date.
  • Sign Variation Required: The calculation requires at least one negative outflow (purchase) and at least one positive inflow (sale or current valuation). If all flows share the same sign, the internal rate cannot be computed.
  • Exclusion of Taxes and Friction: Figures represent gross internal performance and do not incorporate capital gains taxes, trading slippage, brokerage fees, or exit loads.

Frequently asked questions

When should I use XIRR instead of CAGR?
Use CAGR only for a single lump sum investment held from start to finish. For mutual fund SIPs, dividend reinvestments, STP, or sporadic investments, XIRR is mandatory because money is added or withdrawn at multiple different dates.
Why does XIRR require both negative and positive numbers?
XIRR mathematically solves for the discount rate that balances outflows against inflows. Outflows (money invested) must be negative and inflows (redemptions or current market valuation) must be positive.
What does a negative XIRR mean?
A negative XIRR means your investment portfolio has lost value on an annualized basis across the cash flow timeline, with current valuations plus redemptions trailing total deployed capital.
How does XIRR differ from IRR?
Standard IRR assumes cash flows occur at strictly equal time intervals (e.g. exactly annually or monthly). XIRR allows arbitrary, exact daily dates for each cash flow event, accounting for leap years and exact day counts.
What algorithm is used to compute XIRR?
XIRR uses the Newton-Raphson numerical iterative solver with tolerance guards to discover the annualized rate of return where the net present value of all cash flows equals zero.

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Annualised XIRR

19.71%

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