XIRR Calculator

What this calculator tells you

XIRR gives the annualised return of an investment when the money went in and came out on specific dates, which are not always evenly spaced. It is useful for money invested in several instalments, for a fund held over an irregular period, or for any holding where the timing of the cash flows matters.

The result is an annual rate, so it lets you compare investments of different lengths on one basis. It is the same idea as the internal rate of return, but it uses the actual number of days between cash flows rather than assuming equal yearly intervals.

How the XIRR is found

The calculator finds the annual rate at which the present value of the money going out equals the present value of the money coming back, where each amount is discounted by the number of days from the first date divided by 365. Because no simple formula covers many dates, the calculator searches for the rate numerically. For a single investment and a single return, the result has a direct form: the growth factor raised to 365 divided by the days held, minus one.

A worked example

Suppose you invest 10,000 on 1 January 2020 and the holding is worth 12,000 on 1 January 2022. That is 731 days, which includes a leap day. The growth factor is 1.2. Raising 1.2 to the power of 365 divided by 731 gives about 1.095, so the annualised return is about 9.5% a year. A simple two-year average would give a slightly different figure, because it does not account for the exact days.

Why dates change the answer

Two investments with the same total gain can have very different annual returns if their timing differs. A sum that grew quickly over a short period has a high annual rate even if the total gain is modest, while a long holding with the same total gain has a lower rate. The dates are therefore as important as the amounts, and should be entered carefully.

Limits of the calculation

XIRR assumes the amounts and dates are correct and that the money earns the same rate between the dates. It does not reflect the risk taken to earn the return, and a high figure from a short, lucky holding can be misleading. Fees, taxes and the timing of dividends must be entered as cash flows if you want them included. If there is no sign change in the flows, the calculation has no meaningful answer.

Comparing with a simple return

A simple percentage gain ignores timing, while XIRR reflects it. Comparing the two shows how much of the result came from when money was added or withdrawn. A large difference suggests that contributions were made at favourable or unfavourable moments, which is useful to know when you plan future investments.

Record every contribution and withdrawal with its date from the start, because a missing date or amount changes the result. A simple spreadsheet is enough, provided each cash flow is entered exactly.

Using the result

Use XIRR to compare investments on an annual basis when the dates differ, and to review the true performance of a fund you bought in stages. Keep a dated record of each contribution and withdrawal, and check the result against a simple total return, so you can see how much of the figure comes from timing.