CAGR & XIRR Calculator
Calculate Compound Annual Growth Rate (CAGR) and Extended Internal Rate of Return (XIRR) for irregular cash flows.
CAGR & XIRR Calculator
Accurately calculate your annualized return for irregular SIPs, multiple lumpsum deposits, dividend payouts, and point-to-point compound growth using bank-grade numerical solvers.
Transaction Cash Flows
Enter investments as Outflow (Negative) and redemptions / current portfolio value as Inflow (Positive).
| # | Date (YYYY-MM-DD) | Type | Amount (₹) |
|---|
Annualized Performance
Your investment has generated an annualized return of 15.72%, comfortably outperforming historical Nifty 50 long-term compounding (~12%).
Point-to-Point Investment Details
Compound Annual Growth Results
Your initial capital of ₹1,00,000 grew into ₹2,50,000 over 5.0 years, earning a net capital gain of ₹1,50,000.
The Investor's Complete Guide to CAGR & XIRR
When evaluating the performance of your mutual fund folio, stock investments, or private equity assets, traditional percentage return formulas often provide misleading numbers. Choosing between Absolute Return, CAGR, and XIRR depends entirely on the timing and frequency of your cash flows.
1. CAGR vs XIRR vs Absolute Return: The Definitive Comparison
| Metric | Best Used For | Cash Flow Pattern | Formula / Engine |
|---|---|---|---|
| Absolute Return | Single transactions held for less than 12 months | Single initial investment, single final exit | [(Final - Initial) / Initial] × 100 |
| CAGR (Compound Annual Growth Rate) | Lump sum investments, fixed deposits, gold holdings (> 1 year) | Single initial deposit, single maturity value | (Final / Initial)^(1 / Years) - 1 |
| XIRR (Extended Internal Rate of Return) | Mutual Fund SIPs, equity portfolios, multiple lump sum additions, partial profit-booking | Irregular, multi-date cash inflows and outflows | Σ [ C_i / (1 + r)^((d_i - d_0)/365) ] = 0 (Newton-Raphson Solver) |
2. Why Does CAGR Fail for Mutual Fund SIPs?
In a Systematic Investment Plan (SIP), you do not invest your entire capital on Day 1. If you run a monthly SIP of ₹10,000 for 12 months, your first ₹10,000 installment remains invested for a full 365 days, but your 12th installment remains invested for only 30 days.
If your portfolio is worth ₹1,35,000 at the end of the year against a total invested sum of ₹1,20,000, your Absolute Return is (15,000 / 1,20,000) × 100 = 12.5%. If you mistakenly apply the CAGR formula treating ₹1,20,000 as invested on Day 1, you would conclude your annual growth was only 12.5%. However, because your average holding period was only ~6 months, your actual annualized money-weighted return (XIRR) is an astonishing ~24.1%!
3. How Newton-Raphson Solves XIRR
Unlike CAGR, the XIRR equation cannot be rearranged to isolate the rate r on one side because the exponents (d_i - d_0)/365 are fractional calendar days. Financial algorithms solve this by calculating the Net Present Value (NPV) function f(r) and its first derivative f'(r), iteratively taking tangent steps:
Our calculator executes this loop until the error is less than 0.0000001 (one ten-millionth), providing the exact percentage returned by institutional portfolio accounting software and SEBI-registered fund houses.
4. Important Nuances & Limitations of XIRR
- Short-Term Distortion (< 1 Year): Annualization artificially multiplies short-term percentage moves. If an investment rises 3% in 10 days, its XIRR calculates to over 180%. Always disregard XIRR for portfolios under 1 year of age and look at Absolute Return instead.
- Reinvestment Assumption: Like all Internal Rate of Return calculations, XIRR implicitly assumes intermediate cash redemptions can be reinvested at the same internal rate of return.
- Cash Inflows vs Outflows Convention: Every cash outgoing from your bank account is treated as negative, and every receipt (or today's unsold portfolio value) must be entered as positive.
Frequently Asked Questions on CAGR & XIRR
What is the difference between CAGR and XIRR?
CAGR measures point-to-point annual compounding for a single lump sum investment over a fixed multi-year period. XIRR is an extended internal rate of return used when there are multiple, non-periodic cash inflows and outflows on different dates, such as monthly SIPs, top-ups, and partial profit bookings.
Why does my mutual fund app (Groww, Zerodha Coin) show XIRR?
Because SIP installments are debited on different dates at fluctuating NAVs, each batch of units has a different holding period. XIRR accurately weighs each installment by its exact number of days invested, providing an accurate measure of your personal rate of return.
How should I enter my current portfolio value in the XIRR table?
Enter your current total portfolio value as a positive number with today's date (or the date of your latest statement). This represents the liquidation value of your holdings as of today.
Can an XIRR calculation fail to converge?
Yes, if all cash flows are entered with the same sign (all positive or all negative), or if dates are identical. Our calculator performs input sanitization and runs a robust secondary Bisection solver if the primary Newton-Raphson approximation diverges.
What is a good XIRR for equity mutual funds in India?
Historically, broad Indian equity indices (Nifty 50 and BSE Sensex) have delivered between 11% to 14% annualized returns over 7-to-10 year horizons. An XIRR exceeding 12% is generally considered strong long-term wealth compounding that outpaces Indian inflation (~6%) by 600+ basis points.
Is XIRR the same as IRR?
Standard IRR assumes all cash flows occur at strictly equal time intervals (e.g. exactly every 30 days or once a year). XIRR extends IRR by taking into account the exact day count between dates, accounting for leap years, weekends, and irregular installment timings.