What is the XIRR Calculator?
The XIRR calculator is a digital investment return calculation tool that allows investors to calculate annualised return on investments involving multiple transactions done at irregular intervals. When you make multiple deposits and withdrawals in an investment, it becomes quite confusing to compute the expected returns. The XIRR calculator has been designed to help you make such calculations without much trouble.
The XIRR calculator is different from simple interest or compound interest calculators, given the number of times the cash flow occurs and the time periods when they occur. Whether you invest in stocks, mutual funds, Systematic Investment Plans (SIPs), or any investment involving multiple transactions within a period, this calculator can compute returns that you can rely on.
Why Do We Need to Calculate XIRR?
We need to calculate XIRR because it takes into account the different amounts invested and withdrawn at different times.
- Tracks irregular cash flows: XIRR is generated based on the cash flows, both inflow and outflow, related to an investment as recorded from time to time.
- Clearly specifies expected returns: Though the cash flow figures are different for different periods, calculating the extended internal rate of return specifies reliable expected returns, while accounting for all irregularities.
- Helps make better comparisons: When you calculate the XIRR for two investments, you get clarity on the one that is supposed to perform better in the long term, helping you compare portfolio performance against other investments.
- Monitors wealth creation: XIRR, when calculated, helps you keep a check on how much profit you are making, what losses you incur, and the exact status of the wealth you have been creating over the long term.
What Formula We Used to Calculate XIRR?
The formula we used to calculate XIRR involves solving the following equation to obtain the value of r, i.e., the XIRR.
Σ [CashFlow_i ÷ (1 + r)^(days_i ÷ 365)] = 0
Here,
- CashFlow_i = Each cash flow (investment or redemption), whether in or out
- days_i = Number of days from the first cash flow to transaction i
This formula works in an iterative manner, as the number of transactions and the time period differ in each instance — our calculator solves it for you instantly.
How XIRR Calculation Works for SIP vs Lumpsum?
XIRR calculation works for SIP and lumpsum in completely different ways, given the difference in the nature of the investments.
In a lumpsum investment, where you invest the money only once, XIRR is equivalent to the absolute return. But in SIPs or multiple cash-flow investments, XIRR provides an accurate measure of performance because each investment has a different holding period.
Suppose you started investing in a mutual fund through lumpsums and SIPs in 2023.
| Date | Transaction Type | Amount |
|---|---|---|
| 01-Jan-2023 | Initial Investment | −₹50,000 |
| 15-Mar-2023 | Additional Investment | −₹20,000 |
| 01-Jul-2023 | SIP Investment | −₹10,000 |
| 10-Dec-2023 | Partial Withdrawal | +₹15,000 |
| 15-Feb-2024 | Additional Investment | −₹25,000 |
| 01-Aug-2024 | Dividend Received | +₹3,000 |
| 01-Jan-2025 | SIP Investment | −₹15,000 |
| 30-Jun-2025 | Current Portfolio Value | +₹1,40,000 |
Step 1: Understand the Cash Flows
Money Going Out (Investments) = 50,000 + 20,000 + 10,000 + 25,000 + 15,000 = ₹1,20,000
Money Coming In = Partial Withdrawal + Dividend + Current Portfolio Value = 15,000 + 3,000 + 1,40,000 = ₹1,58,000
Step 2: Check the Absolute Gain and Absolute Return
Absolute Gain = 1,58,000 − 1,20,000 = ₹38,000
Absolute Return = (38,000 ÷ 1,20,000) × 100 = 31.67%
The investment, as a lumpsum, generates a return of 31.67%. However, this calculation is incomplete for an SIP as it does not take into consideration the multiple transactions made at different dates.
Step 3: Calculate the XIRR
The XIRR for SIPs is calculated using the formula above, accounting for different transactions at different durations in separate stages. This considers your exact dates of transactions, the duration of every cash flow, inflows and outflows, and annualisation of return.
When you enter these inputs into the calculator, the result obtained is 16.62%, which is far off from the absolute return of 31.67% calculated for a lumpsum.
How to Use an XIRR Calculator?
To use the XIRR calculator on Strike Money, follow the six steps mentioned below.
- Enter all investment amounts: Add each investment transaction separately, including SIPs and other investments, as "Invested".
- Enter the date of each investment: Provide the exact date on which each amount was invested.
- Enter withdrawals or redemption amounts: Record any partial withdrawals, dividend receipts, or redemption values along with their dates, as "Received".
- Add the current portfolio value: Enter the latest value of your investment as a "Received" row if it has not been fully redeemed.
- Let the calculator process the inputs: It processes all cash flows and dates using iterative calculations.
- Read the XIRR result: The final value is shown as the annualised return, reflecting the true performance of the investment after considering the timing of all cash flows.
XIRR Calculation Example for Stock Investment
The XIRR calculation example for stock investment is no different from how it is calculated for other investments.
Suppose you buy shares of a company at different times and later sell part of the investment while still holding some shares.
| Date | Transaction | Amount |
|---|---|---|
| 01-Jan-2023 | Bought Shares | −₹50,000 |
| 01-Jun-2023 | Bought More Shares | −₹30,000 |
| 15-Dec-2023 | Partial Sale of Shares | +₹20,000 |
| 01-Apr-2024 | Dividend Received | +₹5,000 |
| 30-Jun-2025 | Current Portfolio Value | +₹95,000 |
Total Investment = 50,000 + 30,000 = ₹80,000
Total Value Received = 20,000 + 5,000 + 95,000 = ₹1,20,000
Absolute Return = (1,20,000 − 80,000) ÷ 80,000 × 100 = 50%
However, this 50% return does not consider the timing of your investments, partial sales, or dividend income. When you enter the amounts separately using the XIRR calculator, you get the extended internal rate of return accurately, which comes to approximately 22.52%.
This XIRR considers multiple buy and sell transactions, includes dividend income, adjusts for different holding periods, and annualises the overall return so that you can feasibly compare one investment with others.
Download XIRR Calculator Excel
Click here to download the XIRR calculator in Excel format.
What is a Good XIRR Value?
A good XIRR value differs based on the type of investment.
| Type of Investment | Good XIRR Range | Below This | Above This |
|---|---|---|---|
| Fixed Deposits (FDs) | 6% – 8% | Lower than traditional savings returns | Unusually high for low-risk products |
| Debt Mutual Funds | 7% – 10% | Weak debt fund performance | Strong performance for debt category |
| Hybrid Mutual Funds | 10% – 12% | Moderate return | Very good risk-adjusted return |
| Equity Mutual Funds | 12% – 15% | Underperforming long-term expectation | Excellent long-term performance |
| Direct Stock Investments | 15% – 20% | Average market performance | Strong stock-picking performance |
Can XIRR Value Become Negative?
Yes, the XIRR value can become negative. This happens when the current value of one's investment is lower than the total amount invested initially. The negative value indicates an overall financial loss on the investment made.
Difference between XIRR and Absolute Return
The difference between XIRR and absolute return lies in the type of investment they are calculated for.
While calculating the XIRR for a lumpsum amount, where the invested amount remains the same throughout the investment period, the extended internal rate of return and the absolute return remain the same.
On the contrary, when calculating the XIRR for an SIP or any investment that involves multiple investments, redemptions or withdrawals, the extended internal rate of return is not the same as the absolute return, as the latter does not consider:
- Each investment amount that differs
- Timing of cash flows
- Withdrawals and dividends
This makes the absolute return incomplete for any investment with multiple transactions to track and record at irregular intervals. Refer to the calculation shared above in the "How XIRR Calculation Works for SIP vs Lumpsum?" section for better clarity.
Should You Measure XIRR or CAGR?
You should measure XIRR or CAGR depending on the type of investment and the pattern of cash flows involved.
| Basis | XIRR | CAGR |
|---|---|---|
| Best For | SIPs and multiple cash-flow investments | Single lumpsum investments |
| Cash Flows | Handles multiple investments and withdrawals | Assumes one-time investment |
| Time Consideration | Considers exact transaction dates | Assumes fixed investment period |
| Accuracy | More accurate for irregular investments | Suitable for simple investments |
| Common Usage | Mutual funds, stock portfolios, SIPs | Fixed deposits, single stock holding |
In short, by considering irregular cash flows, withdrawals, dividends, and varying holding periods, the XIRR calculator provides a more accurate return figure than absolute return or CAGR. This helps you compare investment performance better, track long-term wealth creation, and make more informed investment decisions across stocks, mutual funds, SIPs, and other market-linked investments.