XIRR is the extended internal rate of return. It is the yearly rate that sets the present value of a series of dated cash flows to zero. Money you invest is a negative flow. Money you take out, including the value on the day you measure, is a positive flow.
Use it when the dates matter. A SIP on the 5th of each month, a lump sum in March, and a redemption in November do not fit a single CAGR. CAGR needs one start and one end. XIRR uses every date. Mutual-fund statements print an XIRR for that reason. It is the honest summary of money that did not all arrive on day one.
The rate is annualised. A fund that did well for three months can show a startling XIRR if you annualise that short stretch. A fund that lost money for three months can show a frightening one. Read the period before you compare it with a ten-year CAGR. The sign convention matters too. If both flows are typed as positive, the sum does not converge to a meaningful rate.
Finfod uses the same XIRR engine for the example below. There is not a separate XIRR page in the tool list yet. The SIP calculator does the forward sum: a monthly amount, a yearly return you choose, and the value at the end. That is a projection. XIRR is how you measure a real statement after the fact.
A worked example
Put in ₹10,000 on 5 April 2024, again on 5 May 2024, and again on 5 June 2024. That is ₹30,000 paid in. On 5 April 2025 the holding is worth ₹31,800. The XIRR engine’s yearly rate for those four dates is 6.56%.
The gap between ₹30,000 and ₹31,800 is the gain. The 6.56% is not “gain divided by money invested”, because the three instalments were not invested for the whole year. A simple division would flatter the later instalments. XIRR does not.
Compare that with CAGR only when you truly have one lump. ₹1,00,000 to ₹2,50,000 over 10 years is 9.6% on the CAGR calculator. A monthly plan belongs on the SIP calculator before the fact, and on the statement’s XIRR after it. The SIP guide says not to compare a short XIRR with a long projection.
Mistakes people make
- Comparing a three-month XIRR with a ten-year CAGR.
- Typing every cash flow as a positive number.
- Using CAGR on a SIP just because it is easier to explain.
- Treating the SIP calculator’s 12% assumption as the XIRR you have earned.
- Annualising a single good month and calling it the fund’s return.
Where it sits
XIRR is a measurement, not a tax section. When you sell the units, tax is section 198 or section 196 (these were sections 112A and 111A), using the gain in rupees, not the XIRR percentage. The capital gains calculator wants the rupees.
Questions
Why does a short SIP show a wild XIRR?
XIRR is annualised. A few months of gain, stretched to a year, can look large or small. The worked example is only a year long and comes out at 6.56%. Read the dates before you compare it with a ten-year CAGR.
Is XIRR the same as CAGR?
No. CAGR needs one start and one end. From ₹1,00,000 to ₹2,50,000 in 10 years, CAGR is 9.6%. XIRR uses every date money moved. A SIP statement is an XIRR story.
Does Finfod have an XIRR calculator?
The XIRR engine is used for this example. The page you can open today is the SIP calculator, which projects ₹10,000 a month forward. That projection is not an XIRR of a past statement.
Sources
Figures checked 28 Oct 2026.