What is XIRR? Returns when money goes in at different dates

XIRR explained: the annualised return that accounts for the dates of every investment and withdrawal, and how it differs from CAGR.

The problem XIRR solves

If you invest every month through a SIP, each rupee stays invested for a different time. A simple average of returns would be misleading.

What XIRR is

XIRR (extended internal rate of return) is the yearly rate that makes the present value of all your investments and withdrawals, on their actual dates, equal to the current value.

XIRR and CAGR

CAGR works for one amount held over a period. XIRR works when there are several investments or withdrawals on different dates, so it is the right measure for SIPs and portfolios.

Reading the number

XIRR is an annualised figure. For very short holding periods it can look extreme, so most reports avoid judging an investment held for less than a year.

Where you will see it

Good portfolio reports show XIRR for each scheme and for the whole portfolio, often next to a benchmark.