XIRR vs CAGR: which return should you look at?
CAGR is for money invested once. XIRR is for money invested on different dates — like a SIP. Using the wrong one can make a good return look poor.
CAGR: one investment, start to end
Compound annual growth rate is the steady yearly rate that turns a start value into an end value. ₹1,00,000 that grew to ₹1,76,234 in 5 years has a CAGR of 12% a year. Try it in the CAGR calculator.
XIRR: many investments on different dates
A SIP puts money in every month, so each instalment is invested for a different length of time. XIRR finds the one yearly rate that makes every instalment, grown to today, add up to today’s value. ₹5,000 a month from January 2023 to December 2025 (₹1,80,000 in total) worth ₹2,50,000 is an XIRR of about 23.8% a year — check it in the SIP XIRR calculator.
Why CAGR misleads for a SIP
If you treat that SIP as if all ₹1,80,000 went in on day one, the growth to ₹2,50,000 over about 2.9 years looks like roughly 12% a year — half the real figure. Most of the money was invested for much less time, so it earned its gain faster. The simple “absolute return” (₹70,000 on ₹1,80,000, about 39%) ignores time altogether.
| Measure | Use it for | SIP example above |
|---|---|---|
| Absolute return | A quick total, no time | ≈ 39% total |
| CAGR | One lump sum held for a period | ≈ 12% a year (misleading here) |
| XIRR | SIPs, top-ups, withdrawals on different dates | ≈ 23.8% a year |
Where to find your real XIRR
Fund houses and CAS statements report XIRR for SIPs. Spendly calculates it from every real instalment after you import your CAS statement.
Track your real investments: import your CAS statement once and Spendly shows every fund’s value and XIRR, kept up to date.
Track my investments →Questions
Is XIRR the same as CAGR?
For a single investment held for the whole period, they give the same answer. For money added or withdrawn at different times, only XIRR is right.
Why is my XIRR very high in the first few months?
Annualising a return over a short time exaggerates it. Wait at least a year before reading much into XIRR.
What is a good XIRR for a mutual fund SIP?
Compare it with the fund’s benchmark and with inflation over the same period, not with a fixed number.