XIRR- in mutual funds, stocks and real estate etc. How to calculate it?(Telugu)

What is XIRR in Mutual Funds? Real Estate, Stocks etc How to calculate it? Many of the Mutual Fund Investors might have come across the word XIRR. But for the majority of them, it is hard to digest what it is. Hence, let us simplify its calculation.

xirr in mutual funds stocks and real estate


There is a huge misconception in understanding the difference between CAGR and XIRR. Hence, first let us understand the meaning of CAGR. CAGR stands for “compounded annualized growth rate”. This means investor every investment are annualized to arrive at CAGR. It is basically point to point return.

The formula used to calculate it as below.

CAGR = ((Ending Amount Beginning Amount^(1/No. of years(N))) – 1

Let us assume that we invested Rs.20000 today and after 5 years, the value of that is Rs.30000, then the avg rate at which investment has compounded year after year is as below.

8.447%=((30000)/20,000)^(1/5))) – 1

This is just for one lump sum investments. But the life of investor does not end with a single investment? We invest regularly or irregularly and at the same time, there is a possibility that we may withdraw money regularly or irregularly. In such a condition, to calculate the returns, He has to use XIRR (Extended Internal Rate of Return).

Read some articles about time value of money in my blog.



XIRR in Mutual Funds – What is it?

Xirr is a measure of return on the multiple investments we did at different points of time. It is a method used to calculate returns on investments where there are multiple transactions happen at a different time. ( in SIPs, lump sum investments or withdrawals in middle).

When you invest in Mutual Fund, if you are investing through SIPs or lump sum or redeeming either through SWP  way or lump sum way, XIRR is the function or formulae which helps you to calculate the returns considering timings of your investments and withdrawals in investment.

So, XIRR is nothing but an aggregation of multiple CAGR’s.

This is applicable in other investments too?

Yes, This function or Formulae can be for other investments in real estate, stocks, and bonds etc. In real estate also sometimes we buy some sqare yards and before selling complete there may be some more buying selling of the land may be there. A Similar thing can happen in equity stocks also. In all these situations xirr can be calculated.  Excel has an inbuilt function to calculate it.

I made a video on how to calculate the XIRR of any investment. Do watch this Telugu video to know more.

Also, read the article about Real Estate-Why it is a bad investment? (Telugu). Click here to read.



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