HaatBeatHow it's calculated
Σ amountₖ ÷ (1 + r)^(daysₖ ÷ 365) = 0
Invested amounts count as negative and amounts received, or the value today, as positive. daysₖ is the number of days from the first entry. r is found by trying rates until the sum is zero.
Assumptions
- Years are 365 days, as in spreadsheet XIRR.
- Each entry happens on its date; taxes and charges are whatever you include in the amounts.
- XIRR describes past cash flows. It does not predict future returns.
Worked example
Investing 10,000 on 1 January in 2023, 2024 and 2025, with a value of 36,000 on 1 January 2026, is an XIRR of about 9.39% a year.
Questions
How is XIRR different from CAGR?
CAGR fits one amount in and one out. XIRR handles many amounts on different dates, such as monthly SIP instalments.
What do I enter as the last entry?
The value of the investment today, marked as received, as if you sold it today.
Why does it say no return could be found?
There must be at least one amount invested and one received. Very unusual patterns of entries can also have no single rate.
Sources
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