Quick answer: XIRR (Extended Internal Rate of Return) is your annualised return when money goes into or comes out of a fund on different dates, for example monthly SIPs, a one-off top-up or a partial withdrawal. It accounts for how long each rupee was actually invested. That’s why it’s the right way to measure SIP returns. Absolute return and CAGR both assume your money went in on a single day.
Last updated: 7 November 2026
Why your SIP needs XIRR, not simple return
Say you invest ₹5,000 on the 5th of every month from January to December 2025. On 5 January 2026, the investment is worth ₹64,500.
- You put in ₹60,000.
- Your profit is ₹4,500.
- Absolute return: 7.5%.
7.5% sounds ordinary. But your money wasn’t invested for a full year. The January instalment had 12 months to grow. The December instalment had one month. On average, each rupee was invested for only about six and a half months.
Once you account for that timing, the XIRR is about 14.1% a year.
Now compare that with a lump sum. If you’d invested the full ₹60,000 on 5 January 2025 and it was worth ₹64,500 a year later, the return would be 7.5% a year. The profit is the same in both cases. The yearly return is very different, because the lump sum kept all ₹60,000 invested for the whole year.
| Same ₹4,500 profit on ₹60,000 | Absolute return | Annualised return |
|---|---|---|
| Monthly SIP of ₹5,000 (Jan–Dec 2025) | 7.5% | XIRR ≈ 14.1% |
| Lump sum of ₹60,000 (Jan 2025) | 7.5% | CAGR = 7.5% |
Illustrative figures. Value measured on 5 January 2026.
That’s the whole point of XIRR. It answers the question “what yearly rate would have turned each of my instalments into what I have today?”
XIRR full form and meaning
XIRR = Extended Internal Rate of Return. It’s a version of IRR (internal rate of return) that works with exact dates, so cash flows don’t have to be evenly spaced. That matters in real life:
- SIP dates shift when the 5th falls on a holiday.
- You might pause a SIP for three months.
- You might add a ₹50,000 bonus in June and withdraw ₹30,000 for a trip in March.
XIRR handles all of these. CAGR can’t.
The XIRR formula
XIRR is the rate r that makes the present value of all your cash flows add up to zero:
Sum of [ Cᵢ ÷ (1 + r)^((dᵢ − d₀) ÷ 365) ] = 0
- Cáµ¢ = each cash flow. Money you invest is negative. Money you take out, and today’s value, are positive.
- dáµ¢ = the date of that cash flow.
- dâ‚€ = the date of your first investment.
There’s no way to rearrange this equation to get r directly. Excel, Google Sheets and investment apps find it by trial and error, testing rates until the equation balances. So be wary of any website that shows a one-line XIRR formula like “NPV ÷ investment × 100”. That isn’t XIRR.
How to calculate XIRR in Excel or Google Sheets
The formula is the same in both: =XIRR(values, dates).
Step 1. In column A, list every transaction date. In column B, list the amounts. Investments are negative, and withdrawals are positive.
Step 2. In the last row, add today’s date and the current value of your holding as a positive number. People often forget this step, and without it the formula has nothing to measure against.
Step 3. In an empty cell, type =XIRR(B2:B14, A2:A14) and format the result as a percentage.
Using the SIP example above:
| A (Date) | B (Amount, ₹) | |
|---|---|---|
| 2 | 05-Jan-2025 | -5,000 |
| 3 | 05-Feb-2025 | -5,000 |
| 4 | 05-Mar-2025 | -5,000 |
| … | … | … |
| 13 | 05-Dec-2025 | -5,000 |
| 14 | 05-Jan-2026 | 64,500 |
Result: 14.07%.
Getting a #NUM! error? It usually means one of these:
- All amounts have the same sign (you forgot the current value, or entered investments as positive).
- A date is typed as text instead of a real date.
- The first row isn’t your earliest transaction.
A messier, more realistic example
Most portfolios aren’t a neat 12-month SIP. Here’s a common pattern:
- ₹10,000 SIP on the 10th of every month, January 2024 to December 2025 (24 instalments)
- ₹50,000 lump-sum top-up on 15 June 2024
- ₹30,000 withdrawn on 20 March 2025
- Portfolio value on 10 January 2026: ₹3,10,000
| Measure | Result | What it tells you |
|---|---|---|
| Total invested | ₹2,90,000 | |
| Absolute return | 17.2% | (₹3,10,000 + ₹30,000 − ₹2,90,000) ÷ ₹2,90,000. This ignores timing. |
| XIRR | 15.8% a year | The yearly rate that accounts for every date and amount |
CAGR can’t be calculated for this portfolio at all, because there’s no single start date. This is exactly the kind of case XIRR was built for.
What is a good XIRR for a mutual fund?
There’s no universal “good” number. Many websites say 12% for equity and 7–8% for debt, but a fixed figure ignores when you invested. A SIP started at the start of 2020 and one started at the end of 2021 will show very different XIRRs in the same fund.
Use these four checks instead:
- Against the fund’s benchmark, over the same dates. If your flexi cap SIP shows a 13% XIRR and the same SIP into the Nifty 500 TRI over the same dates would have earned 15%, your fund has lagged. This is the comparison that matters most.
- Against similar funds. Compare SIP returns for the same period with other funds in the same category, not with a small cap fund that had a great year.
- Against your goal. If your retirement plan assumes 10% a year and your 8-year SIP XIRR is 11%, you’re on track, whatever anyone else is earning.
- Against inflation. Over long periods, an equity fund’s XIRR should comfortably beat inflation. If it doesn’t over 7+ years, look closely at the fund.
Only judge XIRR over periods of 3 years or more for equity funds. Here’s why.
Why your XIRR looks crazy in the first year
XIRR turns any gain or loss into a yearly rate. Over short periods, that exaggerates small moves.
Take a ₹5,000 SIP for three months (January to March 2025). On 5 April, the investment is:
| Value on 5 April | Absolute change | XIRR |
|---|---|---|
| ₹14,400 | −4% | about −22% |
| ₹15,600 | +4% | about +27% |
A ₹600 swing either way shows up as a dramatic yearly figure. Neither number tells you anything about how the fund will do over 10 years.
So if your app shows a negative XIRR in the first year or two of a SIP, that alone isn’t a reason to stop. Falling markets mean each instalment buys more units at lower prices. We cover this in more detail in I started a SIP and the market crashed.
Can XIRR be negative?
Yes. A negative XIRR means your current value is lower than what you’d have if you’d earned 0% on every instalment. In other words, you’re showing a loss after accounting for timing.
For equity funds, this is common in the first 1–2 years and after sharp market falls. Over 5–7 years or more it’s much rarer, but it can happen, and it’s worth discussing with your advisor if it does.
XIRR vs CAGR vs absolute return
| Absolute return | CAGR | XIRR | |
|---|---|---|---|
| What it measures | Total gain as a % | Yearly growth from one start to one end | Yearly return across many dated cash flows |
| Considers time? | No | Yes, one period | Yes, every transaction |
| Best for | Holdings under 1 year | One lump sum held for 1+ years | SIPs, top-ups, withdrawals, SWPs |
| Used for your SIP? | Misleading | Can’t be used | Yes |
We’ll go deeper on all three in our upcoming guide to CAGR vs XIRR vs absolute return.
XIRR on your app vs returns on the fund’s factsheet
These are two different numbers, and they often confuse people.
- Factsheet returns (1-year, 3-year, 5-year) are point-to-point CAGR for a single lump sum invested on a fixed date. They describe the fund.
- Your XIRR is calculated from your dates and amounts. It describes your investment in the fund.
Two people in the same fund can have very different XIRRs. One may have started their SIP before a rally and the other just before a fall. Neither the fund nor the investor did anything wrong.
What XIRR doesn’t tell you
- Risk. Two funds with a 14% XIRR can take you on very different rides. For a measure of risk, look at volatility and drawdowns. Our guide to the Sharpe ratio and standard deviation is coming next.
- Tax. XIRR is calculated before tax. Equity gains above ₹1.25 lakh a year are taxed at 12.5% when held over 12 months, so your take-home return is lower. See LTCG on mutual funds.
- The future. XIRR is a backward-looking number. A high XIRR this year doesn’t mean the fund will repeat it. See why the best-performing fund is often a bad choice.
- Valuation-day noise. XIRR changes daily with the NAV. Look at the trend over years, not the number on a single day.
Where to find your XIRR
- Your investment app’s portfolio screen. Most investment platforms show XIRR for each fund and for your whole portfolio.
- Calculate it yourself. Download your Consolidated Account Statement using your PAN, copy the transaction dates and amounts into Excel, and use the steps above.
FAQs
What is XIRR in simple words?
It’s the yearly return on your investment after accounting for the exact date of every SIP instalment, top-up and withdrawal.
What is the full form of XIRR?
Extended Internal Rate of Return.
Is XIRR better than CAGR?
For SIPs and investments with several transactions, yes, because CAGR only works with one start date and one end date. For a single lump sum, CAGR and XIRR give the same answer.
Does XIRR include dividends and exit loads?
XIRR uses whatever values you enter. If you use your actual current value or redemption proceeds (after any exit load), it reflects them. App figures are generally calculated before tax.
Why is my XIRR different from my friend’s in the same fund?
You invested on different dates and in different amounts. XIRR is personal to your cash flows.
How long should I wait before judging my SIP’s XIRR?
For equity funds, at least 3 years, and ideally 5 or more. Short-period XIRR exaggerates small market moves.
Mutual fund investments are subject to market risks. Read all scheme-related documents carefully. RingMoney is an AMFI-registered mutual fund distributor (ARN-320453). All examples are illustrative and don’t indicate the returns of any scheme. Past performance doesn’t guarantee future returns.
Try it: RingMoney SIP Calculator · Related reading: SIP vs Lumpsum · ₹5,000 SIP for 20 Years · Mutual Fund Overlap
