What is XIRR?
A simple explanation for Indian investors — Wealth Simplified.
Quick Answer
XIRR, or Extended Internal Rate of Return, estimates the annualised return when investments or withdrawals happen on different dates.
Simple Explanation
XIRR is useful for SIP-style cash flows where money is added over time.
How It Works
It solves for the rate that sets the net present value of all dated cash flows to zero.
Why It Matters
A single CAGR may not fit irregular contributions; XIRR reflects timing.
Simple Example
Monthly SIPs plus a redemption on a later date can be evaluated together using XIRR.
Common Misconception
Past XIRR is not a guarantee of future returns.
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