What Is XIRR? The Right Way to Measure SIP Returns

When you invest a lump sum, CAGR tells you the annual growth. But a SIP invests on many different dates — so which return applies? That's what XIRR solves.

The idea XIRR (Extended Internal Rate of Return) is the single annualised rate that makes all your dated cash flows add up correctly. Each SIP instalment has been invested for a different length of time; XIRR weighs them properly.

Why not just use total return? "My ₹6 lakh became ₹9 lakh" hides the fact that later instalments were invested for only a few months. XIRR gives the true annualised rate — comparable across funds and time periods.

See it live Our SIP calculator computes XIRR on any fund's real historical NAVs. For example, a ₹5,000/month SIP might show a total gain of 90% but an XIRR of ~13% a year — the honest annual figure.

Rule of thumb: compare funds by XIRR (for SIPs) or CAGR (for lump sums), never by total absolute gain alone.