Find the annualized return of an investment with irregular cash flows — an initial investment, an additional investment, and a final value.
XIRR finds the annual rate that makes the net present value of all your cash flows (in and out, on their actual dates) equal to zero. This calculator solves it numerically for an initial investment, one optional additional investment, and a final redemption value.
Educational tool only — not investment advice. Markets involve risk; past performance and illustrative math don't guarantee future results.
CAGR assumes a single investment made once and redeemed once — exactly the scenario a lump-sum investment fits, and exactly the scenario a SIP does not. A Systematic Investment Plan involves dozens or hundreds of separate contributions, each made on a different date, each with a different amount of time left to grow before the final valuation date. Applying CAGR to that kind of investment produces a number that doesn't actually reflect the real annualized return, because CAGR has no way to account for money arriving at different points in time — it can only compare one starting value to one ending value.
XIRR (Extended Internal Rate of Return) solves exactly this problem: it finds the single annualized rate of return that, when applied to every individual cash flow on its actual date, makes the sum of all those discounted cash flows equal to zero — correctly weighting each contribution by both its amount and precisely how long it was invested. This is why XIRR is the standard, correct metric for SIPs, systematic withdrawal plans (SWPs), staggered lump-sum top-ups, or any investment with irregular deposits or withdrawals, while CAGR should be reserved strictly for a genuine single lump-sum investment held with zero additions or withdrawals until redemption.
CAGR assumes a single investment made once and redeemed once, so it can't correctly account for the fact that a SIP involves many separate contributions made on different dates, each with a different amount of time to grow. Applying CAGR to a SIP produces a distorted number that doesn't reflect the real annualized return.
XIRR finds the single annualized rate of return that makes the present value of every individual cash flow — each contribution and the final redemption, each on its actual date — sum to zero. It correctly weights each contribution by both its amount and exactly how long it was invested, which is what makes it accurate for irregular cash flow patterns.
Use XIRR whenever there are multiple cash flows at different times — a SIP, a systematic withdrawal plan (SWP), staggered lump-sum top-ups, or partial redemptions. Reserve CAGR strictly for a genuine single lump-sum investment held from one date to one date with no additions or withdrawals in between.
In principle XIRR reflects the annualized rate implied by the cash flow timing and amounts, so a modestly positive total gain over a very long period can still show a fairly low XIRR, and a SIP that's currently underwater (total invested exceeds current value) will show a negative XIRR. It's a rate of return measure, not simply a profit/loss indicator.