What is XIRR?↓
XIRR, or Extended Internal Rate of Return, is an annualized return measure that accounts for the exact dates of multiple cash flows. Unlike a standard IRR calculation, XIRR accounts for the actual time between cash flows. It is highly useful when investments or withdrawals happen at irregular intervals.
How is XIRR different from IRR?↓
IRR typically assumes periodic cash flows occurring at regular intervals, such as annually or monthly. XIRR uses actual dates, making it suitable when cash flows occur at irregular intervals, which is common in real-world investing.
What is the difference between XIRR and CAGR?↓
CAGR works well when there is a simple beginning value and an ending value over a defined period. XIRR is designed for multiple cash flows occurring on different dates. If you make one investment and wait 5 years, use CAGR. If you make multiple irregular contributions, use XIRR.
How do I calculate XIRR?↓
To calculate XIRR, you need a list of cash flow amounts and the exact dates they occurred. You can use our XIRR Calculator by entering each investment as a negative amount, each withdrawal or final value as a positive amount, along with their respective dates, to instantly find the annualized return.
How should I enter investments into an XIRR calculator?↓
Investments or contributions represent money leaving your pocket, so they should always be entered as negative numbers (e.g., -10000). Money returning to you, such as withdrawals, dividends, or the final portfolio value, should be entered as positive numbers.
Should investments be entered as negative numbers?↓
Yes. In cash-flow analysis, any money you pay out or invest is a cash outflow and must be entered as a negative number.
Should withdrawals be positive or negative?↓
Withdrawals should be positive numbers. Any money you receive back from the investment is considered a cash inflow.
Can I use XIRR for SIP investments?↓
Yes. While a regular SIP has periodic cash flows, XIRR can still be extremely useful for calculating returns from the actual transaction dates and amounts, especially if there were missed payments or extra lump-sum additions.
Can I use XIRR for mutual funds?↓
Absolutely. XIRR is the standard way to evaluate a personal sequence of mutual-fund cash flows, accounting for purchases and redemptions made on different dates over time.
Can XIRR be negative?↓
Yes, negative XIRR is mathematically possible and quite common. It simply means that the cash flows correspond to an annualized loss rather than a gain over the investment period.
Why can't my XIRR be calculated?↓
If XIRR cannot be calculated, it's usually because the sequence lacks either a negative cash flow (an investment) or a positive cash flow (a return), or the dates are invalid. A valid calculation requires money going out and money coming in.
Can XIRR have more than one result?↓
Yes, certain complex cash-flow patterns (where the cash flow alternates between positive and negative multiple times) can mathematically produce more than one valid XIRR. In such cases, the numerical solver might struggle to find a single, economically meaningful root.
Does XIRR consider the exact investment dates?↓
Yes, XIRR uses the exact number of days between cash flows to determine the annualized rate, based on a 365-day year convention.
Is XIRR the same as profit percentage?↓
No. Profit percentage (or ROI) measures the total monetary gain compared to the amount invested. XIRR is an annualized rate that factors in exactly how long each dollar was invested.
What does a 12% XIRR mean?↓
A 12% XIRR means your sequence of dated cash flows corresponds to an equivalent annualized return of approximately 12% per year. It does not mean the investment literally grew by exactly 12% every single calendar year.
