XIRR Calculator Online – For SIP Investments
If you are an investor who makes multiple investments or withdrawals at different points in time, you might be wondering how to calculate the return on your portfolio. You might have heard of CAGR, which stands for Compound Annual Growth Rate, but did you know that CAGR is not suitable for irregular cash flows?
In this blog post, we will introduce you to XIRR, which stands for Extended Internal Rate of Return, and show you how to use it to measure the return on irregular investments. You can use our XIRR Calculator Online to calculate returns on your investments.
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XIRR Calculator
Investments:
Maturity:
XIRR Returns Calculator Results:
| Total Invested Amount | Maturity Amount | Total Returns in % | XIRR Returns in % |
|---|---|---|---|
| – | – | – | – |
Utilize this advanced XIRR calculator to determine the Internal Rate of Return (IRR) for cash flows that occur at irregular intervals. Simply input the dates and amounts of each cash flow, and the calculator will compute the annualized IRR for these non-uniform cash flows.
The accuracy of the results matches that of Microsoft Excel's XIRR function, ensuring reliable and precise calculations for your financial analysis.
How to Use the XIRR Calculator?
Our XIRR Calculator allows you to add multiple investments (Regular/Irregular). You need to enter your investment amount with dates and finally mention the amount you are withdrawing after your investments.
Our intelligent XIRR calculator will calculate the XIRR for investments you have made on different dates.
What is XIRR?
XIRR is a financial tool that calculates the internal rate of return (IRR) of a series of cash flows that occur at irregular intervals. It takes into account the time value of money and provides a more accurate measure of return on investment, especially for investments with irregular cash flows.
Consider reading more on IRR on Investopedia.
XIRR is useful for situations where you invest or withdraw money at different times and amounts, such as:
- Investing in a mutual fund through SIPs (Systematic Investment Plans)
- Investing in a stock or bond that pays dividends or coupons on different dates
- Investing in a project that has multiple inflows and outflows
- Investing in a portfolio that has multiple assets with different cash flows
XIRR tells you the annualized rate of return that makes the net present value (NPV) of all cash flows equal to zero. In other words, it tells you the rate of return that equates the present value of your investments with the present value of your returns.
How XIRR is Calculated in the XIRR Calculator
XIRR, or Extended Internal Rate of Return, is determined by a calculation that identifies the rate of return at which the Net Present Value (NPV) of all cash flows equals zero. It's expressed as:
XIRR = r, where NPV = 0
Here's what each term means:
- NPV: The Net Present Value of all cash flows.
- r: The annualized rate of return.
- Cash flow: The amount of money invested or withdrawn at a specific date.
The NPV for each cash flow is found by discounting it according to the rate of return and the time passed since the initial investment. This is the formula:
NPV = Cash flow / (1 + r) ^ t
In this equation:
- t represents the time in years since the initial investment.
To calculate XIRR, you'll need:
- The initial investment amount and its date.
- All subsequent cash flows (whether incoming or outgoing) and their respective dates.
- An optional guess for the rate of return.
You can compute XIRR using our online calculator or through an Excel spreadsheet. If you prefer a more hands-on approach, you can also find XIRR manually using an iterative process.
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What is the difference between XIRR and CAGR
CAGR and XIRR are both measures of annualized returns, but they have some key differences in their calculations and applications. Here is a summary table that compares XIRR vs. CAGR:
| XIRR | CAGR |
|---|---|
| Accounts for irregular cash flows | Assumes lump sum investment |
| Considers all cash flows throughout the investment period | Only considers the beginning and ending values |
| Solves for the rate of return that makes NPV equal to zero | Calculates the average annual growth rate |
| More accurate and realistic for irregular investments | Simpler and easier for regular investments |
How Investors Should Interpret XIRR
XIRR is a useful tool for investors who want to compare the performance of different investments with irregular cash flows. It helps them evaluate the profitability and efficiency of their investments over time.
However, investors should also be aware of some limitations and challenges of using XIRR, such as:
- XIRR may not be unique or may not exist for some cash flow patterns.
- XIRR may be sensitive to small changes in cash flow timing or amounts.
- XIRR may not reflect the risk or volatility of an investment.
Therefore, investors should use XIRR with caution and supplement it with other metrics and analyses to get a holistic view of their investments.
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Final Thoughts on XIRR Calculator Online
XIRR is a powerful tool that can help you measure the return on irregular investments. It can help you compare different investments with different cash flow patterns and timings. However, XIRR is not perfect and has some limitations and challenges that you should be aware of.
You should use XIRR with caution and supplement it with other metrics and analyses to get a holistic view of your investments. Use our XIRR Calculator online to check your investment returns!
We hope this blog post has helped you understand XIRR better and how to use it effectively. Thank you for reading, and happy investing!
Consider using our Lumpsum Investment Calculator to calculate returns on one-time investments.
FAQs on XIRR Calculator Online
How to Calculate XIRR or Annualized Returns Using the XIRR Calculator?
To arrive at the Annualized returns, Use our XIRR Calculator and enter the investment and maturity amount along with the investment tenure information.
What is an Annualized Return?
An annualized return represents the rate of return on an investment over a one-year period. It's expressed as a geometric average, indicating potential earnings if the return compounds over time. However, it's important to note that this calculation doesn't account for possible price changes or volatility of the investment.
What is a good XIRR?
XIRR of 12% is considered as good for investments.
