{"id":12081,"date":"2026-08-14T17:30:44","date_gmt":"2026-08-14T12:00:44","guid":{"rendered":"https:\/\/www.fatakpay.com\/blog\/?p=12081"},"modified":"2026-08-14T17:30:45","modified_gmt":"2026-08-14T12:00:45","slug":"xirr-vs-cagr","status":"publish","type":"post","link":"https:\/\/www.fatakpay.com\/blog\/mutual-funds\/xirr-vs-cagr\/","title":{"rendered":"Difference Between\u00a0XIRR and CAGR\u00a0"},"content":{"rendered":"\n<p class=\"wp-block-paragraph\">Two investors can look at the same mutual fund&#8217;s fact sheet and arrive at&nbsp;very different&nbsp;&#8220;return&#8221; figures, depending on which metric they use and how they invested. The&nbsp;difference between&nbsp;XIRR and CAGR&nbsp;matters once you move beyond a single lump-sum investment into regular SIP contributions, since each metric is built to measure a different kind of cash flow pattern.&nbsp;<\/p>\n\n\n\n<div id=\"ez-toc-container\" class=\"ez-toc-v2_0_86 counter-hierarchy ez-toc-counter ez-toc-grey ez-toc-container-direction\">\n<div class=\"ez-toc-title-container\">\n<p class=\"ez-toc-title\" style=\"cursor:inherit\">Table of Contents<\/p>\n<span class=\"ez-toc-title-toggle\"><a href=\"#\" class=\"ez-toc-pull-right ez-toc-btn ez-toc-btn-xs ez-toc-btn-default ez-toc-toggle\" aria-label=\"Toggle Table of Content\"><span class=\"ez-toc-js-icon-con\"><span class=\"\"><span class=\"eztoc-hide\" style=\"display:none;\">Toggle<\/span><span class=\"ez-toc-icon-toggle-span\"><svg style=\"fill: #999;color:#999\" xmlns=\"http:\/\/www.w3.org\/2000\/svg\" class=\"list-377408\" width=\"20px\" height=\"20px\" viewBox=\"0 0 24 24\" fill=\"none\"><path d=\"M6 6H4v2h2V6zm14 0H8v2h12V6zM4 11h2v2H4v-2zm16 0H8v2h12v-2zM4 16h2v2H4v-2zm16 0H8v2h12v-2z\" fill=\"currentColor\"><\/path><\/svg><svg style=\"fill: #999;color:#999\" class=\"arrow-unsorted-368013\" xmlns=\"http:\/\/www.w3.org\/2000\/svg\" width=\"10px\" height=\"10px\" viewBox=\"0 0 24 24\" version=\"1.2\" baseProfile=\"tiny\"><path d=\"M18.2 9.3l-6.2-6.3-6.2 6.3c-.2.2-.3.4-.3.7s.1.5.3.7c.2.2.4.3.7.3h11c.3 0 .5-.1.7-.3.2-.2.3-.5.3-.7s-.1-.5-.3-.7zM5.8 14.7l6.2 6.3 6.2-6.3c.2-.2.3-.5.3-.7s-.1-.5-.3-.7c-.2-.2-.4-.3-.7-.3h-11c-.3 0-.5.1-.7.3-.2.2-.3.5-.3.7s.1.5.3.7z\"\/><\/svg><\/span><\/span><\/span><\/a><\/span><\/div>\n<nav><ul class='ez-toc-list ez-toc-list-level-1 ' ><li class='ez-toc-page-1 ez-toc-heading-level-2'><a class=\"ez-toc-link ez-toc-heading-1\" href=\"https:\/\/www.fatakpay.com\/blog\/mutual-funds\/xirr-vs-cagr\/#What_Is_CAGR\" >What Is CAGR?&nbsp;<\/a><\/li><li class='ez-toc-page-1 ez-toc-heading-level-2'><a class=\"ez-toc-link ez-toc-heading-2\" href=\"https:\/\/www.fatakpay.com\/blog\/mutual-funds\/xirr-vs-cagr\/#What_Is_XIRR\" >What Is XIRR?&nbsp;<\/a><\/li><li class='ez-toc-page-1 ez-toc-heading-level-2'><a class=\"ez-toc-link ez-toc-heading-3\" href=\"https:\/\/www.fatakpay.com\/blog\/mutual-funds\/xirr-vs-cagr\/#XIRR_vs_CAGR_Key_Differences\" >XIRR vs CAGR: Key Differences&nbsp;<\/a><\/li><li class='ez-toc-page-1 ez-toc-heading-level-2'><a class=\"ez-toc-link ez-toc-heading-4\" href=\"https:\/\/www.fatakpay.com\/blog\/mutual-funds\/xirr-vs-cagr\/#Formulas_a_Worked_Example\" >Formulas &amp; a Worked Example&nbsp;<\/a><\/li><li class='ez-toc-page-1 ez-toc-heading-level-2'><a class=\"ez-toc-link ez-toc-heading-5\" href=\"https:\/\/www.fatakpay.com\/blog\/mutual-funds\/xirr-vs-cagr\/#XIRR_vs_CAGR_Pros_and_Cons\" >XIRR vs CAGR: Pros and Cons&nbsp;<\/a><\/li><li class='ez-toc-page-1 ez-toc-heading-level-2'><a class=\"ez-toc-link ez-toc-heading-6\" href=\"https:\/\/www.fatakpay.com\/blog\/mutual-funds\/xirr-vs-cagr\/#Which_Should_You_Use\" >Which Should You Use?&nbsp;<\/a><\/li><li class='ez-toc-page-1 ez-toc-heading-level-2'><a class=\"ez-toc-link ez-toc-heading-7\" href=\"https:\/\/www.fatakpay.com\/blog\/mutual-funds\/xirr-vs-cagr\/#Conclusion\" >Conclusion&nbsp;<\/a><\/li><li class='ez-toc-page-1 ez-toc-heading-level-2'><a class=\"ez-toc-link ez-toc-heading-8\" href=\"https:\/\/www.fatakpay.com\/blog\/mutual-funds\/xirr-vs-cagr\/#FAQs_on_XIRR_vs_CAGR\" >FAQs on&nbsp;XIRR vs CAGR&nbsp;<\/a><ul class='ez-toc-list-level-3' ><li class='ez-toc-heading-level-3'><a class=\"ez-toc-link ez-toc-heading-9\" href=\"https:\/\/www.fatakpay.com\/blog\/mutual-funds\/xirr-vs-cagr\/#What_is_the_difference_between_XIRR_and_CAGR\" >What is the&nbsp;difference between&nbsp;XIRR and CAGR?&nbsp;<\/a><\/li><li class='ez-toc-page-1 ez-toc-heading-level-3'><a class=\"ez-toc-link ez-toc-heading-10\" href=\"https:\/\/www.fatakpay.com\/blog\/mutual-funds\/xirr-vs-cagr\/#Which_should_I_use_for_a_SIP\" >Which should I use for a SIP?&nbsp;<\/a><\/li><li class='ez-toc-page-1 ez-toc-heading-level-3'><a class=\"ez-toc-link ez-toc-heading-11\" href=\"https:\/\/www.fatakpay.com\/blog\/mutual-funds\/xirr-vs-cagr\/#What_is_the_full_form_of_XIRR\" >What is the full form of XIRR?&nbsp;<\/a><\/li><li class='ez-toc-page-1 ez-toc-heading-level-3'><a class=\"ez-toc-link ez-toc-heading-12\" href=\"https:\/\/www.fatakpay.com\/blog\/mutual-funds\/xirr-vs-cagr\/#Can_I_calculate_XIRR_manually\" >Can I calculate XIRR manually?&nbsp;<\/a><\/li><li class='ez-toc-page-1 ez-toc-heading-level-3'><a class=\"ez-toc-link ez-toc-heading-13\" href=\"https:\/\/www.fatakpay.com\/blog\/mutual-funds\/xirr-vs-cagr\/#Is_a_higher_XIRR_better\" >Is a higher XIRR better?&nbsp;<\/a><\/li><li class='ez-toc-page-1 ez-toc-heading-level-3'><a class=\"ez-toc-link ez-toc-heading-14\" href=\"https:\/\/www.fatakpay.com\/blog\/mutual-funds\/xirr-vs-cagr\/#Which_gives_the_true_return\" >Which gives the true return?&nbsp;<\/a><\/li><\/ul><\/li><\/ul><\/nav><\/div>\n<h2 class=\"wp-block-heading\"><span class=\"ez-toc-section\" id=\"What_Is_CAGR\"><\/span>What Is CAGR?&nbsp;<span class=\"ez-toc-section-end\"><\/span><\/h2>\n\n\n\n<p class=\"wp-block-paragraph\">CAGR, or Compound Annual Growth Rate, measures the annualised growth of a single investment from one starting value to one ending value over a defined period, assuming steady compounding throughout.\u00a0<a href=\"https:\/\/www.fatakpay.com\/blog\/mutual-funds\/what-is-cagr-in-mutual-funds\/\" target=\"_blank\" rel=\"noreferrer noopener\"><strong>CAGR in mutual funds<\/strong><\/a>\u00a0is commonly used to evaluate the long-term performance of lump-sum investments, making it easier to compare different schemes over the same investment horizon.\u00a0<\/p>\n\n\n\n<p class=\"wp-block-paragraph\">It works cleanly for a lump-sum investment made once and held until a specific exit date, since there is only one cash inflow and one cash outflow. Because it collapses an entire holding period into a single smooth growth rate, CAGR is easy to calculate and compare across mutual funds, but only when there is one entry point and one exit point involved.&nbsp;<\/p>\n\n\n\n<h2 class=\"wp-block-heading\"><span class=\"ez-toc-section\" id=\"What_Is_XIRR\"><\/span>What Is XIRR?&nbsp;<span class=\"ez-toc-section-end\"><\/span><\/h2>\n\n\n\n<p class=\"wp-block-paragraph\">XIRR, or Extended Internal Rate of Return, calculates the annualised return of an investment that involves multiple cash flows made at different dates, exactly what happens when you run a monthly SIP. It accounts for the timing and size of every individual instalment, giving a far more&nbsp;accurate&nbsp;picture of your actual return than a simple average would. This makes XIRR the standard metric used by most mutual fund apps and portfolio trackers whenever a SIP or any irregular series of investments is involved, since it correctly reflects how long each instalment has&nbsp;actually stayed&nbsp;invested.&nbsp;<\/p>\n\n\n\n<h2 class=\"wp-block-heading\"><span class=\"ez-toc-section\" id=\"XIRR_vs_CAGR_Key_Differences\"><\/span>XIRR vs CAGR: Key Differences&nbsp;<span class=\"ez-toc-section-end\"><\/span><\/h2>\n\n\n\n<p class=\"wp-block-paragraph\">The two metrics are often confused because both express returns as an annualised percentage, but the similarity ends there. CAGR is built around a single cash inflow and a single cash outflow, while XIRR is built to handle any number of cash flows spread across different dates and amounts. This difference in design is why one is simple to calculate by hand while the other typically needs software to solve for the rate iteratively.&nbsp;<\/p>\n\n\n\n<figure class=\"wp-block-table\"><table class=\"has-fixed-layout\"><tbody><tr><td><strong>Basis<\/strong>&nbsp;<\/td><td><strong>CAGR<\/strong>&nbsp;<\/td><td><strong>XIRR<\/strong>&nbsp;<\/td><\/tr><tr><td>Best Suited For&nbsp;<\/td><td>Single lump-sum investment&nbsp;<\/td><td>Multiple cash flows, like SIPs&nbsp;<\/td><\/tr><tr><td>Cash Flow Handling&nbsp;<\/td><td>Assumes one entry and one exit&nbsp;<\/td><td>Accounts for every instalment&#8217;s date and amount&nbsp;<\/td><\/tr><tr><td>Calculation Complexity&nbsp;<\/td><td>Simple formula, easy to compute manually&nbsp;<\/td><td>Requires iterative calculation, usually done via software&nbsp;<\/td><\/tr><tr><td>Accuracy for SIPs&nbsp;<\/td><td>Misleading if applied to SIP investments&nbsp;<\/td><td>Accurate reflection of SIP returns&nbsp;<\/td><\/tr><tr><td>Common Use&nbsp;<\/td><td>Comparing lump-sum fund performance&nbsp;<\/td><td>Tracking actual SIP portfolio returns&nbsp;<\/td><\/tr><\/tbody><\/table><\/figure>\n\n\n\n<p class=\"wp-block-paragraph\">Choosing the wrong metric for your investment style&nbsp;doesn&#8217;t&nbsp;just give a slightly different number, it can give a fundamentally misleading picture of how your money has&nbsp;actually performed.&nbsp;<\/p>\n\n\n\n<h2 class=\"wp-block-heading\"><span class=\"ez-toc-section\" id=\"Formulas_a_Worked_Example\"><\/span>Formulas &amp; a Worked Example&nbsp;<span class=\"ez-toc-section-end\"><\/span><\/h2>\n\n\n\n<p class=\"wp-block-paragraph\">CAGR follows a straightforward formula:\u00a0CAGR = (FV \/\u00a0IV)^(1\/n) \u2212 1, where FV is the final value, IV is the\u00a0initial\u00a0investment, and n is the number of years held. For example, a lump-sum investment of \u20b91,00,000 that grows to \u20b91,40,000 over 3 years works out to CAGR = (1,40,000\/1,00,000)^(1\/3) \u2212 1, or\u00a0roughly 11.9%\u00a0per year.\u00a0<\/p>\n\n\n\n<p class=\"wp-block-paragraph\">XIRR\u00a0doesn&#8217;t\u00a0have a simple closed-form formula because it deals with multiple cash flows on different dates. Instead, it solves for the single annualised rate at which the net present value of every dated cash flow (each SIP instalment as a negative outflow, and the final redemption value as a positive inflow) sums to zero. <\/p>\n\n\n\n<p class=\"wp-block-paragraph\">This is why XIRR is calculated iteratively, typically using a spreadsheet function, rather than worked out by hand: with monthly instalments invested at different NAVs and held for different durations, only an iterative solve can weight each contribution correctly.\u00a0<\/p>\n\n\n\n<h2 class=\"wp-block-heading\"><span class=\"ez-toc-section\" id=\"XIRR_vs_CAGR_Pros_and_Cons\"><\/span>XIRR vs CAGR: Pros and Cons&nbsp;<span class=\"ez-toc-section-end\"><\/span><\/h2>\n\n\n\n<p class=\"wp-block-paragraph\">CAGR&#8217;s biggest strength is its simplicity: it needs only two numbers and&nbsp;a time period, making it easy to compute manually and easy to use when comparing lump-sum performance across different funds. Its weakness is equally clear: it assumes a single entry and exit, so applying it to a SIP ignores the timing of individual&nbsp;installments&nbsp;and can understate or overstate the real picture entirely.&nbsp;<\/p>\n\n\n\n<p class=\"wp-block-paragraph\">XIRR&#8217;s strength is that it captures reality: it accounts for every instalment&#8217;s date and size, making it the&nbsp;accurate&nbsp;choice for SIPs and any irregular investment pattern. Its trade-off is complexity: it can&#8217;t be solved with a simple formula and needs iterative calculation, usually through a spreadsheet or app. XIRR can also swing sharply in the early months of a SIP or right after a market rally or crash,&nbsp;since recent&nbsp;installments&nbsp;have had very little time to compound. This can make short-term XIRR figures unreliable as a long-term indicator.&nbsp;<\/p>\n\n\n\n<h2 class=\"wp-block-heading\"><span class=\"ez-toc-section\" id=\"Which_Should_You_Use\"><\/span>Which Should You Use?&nbsp;<span class=\"ez-toc-section-end\"><\/span><\/h2>\n\n\n\n<ul class=\"wp-block-list\">\n<li>Use\u00a0<strong>CAGR<\/strong>\u00a0for a single lump-sum investment held from one start date to one end date\u00a0<\/li>\n<\/ul>\n\n\n\n<ul class=\"wp-block-list\">\n<li>Use CAGR when comparing historical lump-sum performance across different funds over the same time horizon\u00a0<\/li>\n<\/ul>\n\n\n\n<ul class=\"wp-block-list\">\n<li>Use\u00a0<strong>XIRR<\/strong>\u00a0whenever your investment involves multiple contributions at different dates, such as a SIP\u00a0<\/li>\n<\/ul>\n\n\n\n<ul class=\"wp-block-list\">\n<li>Use XIRR to correctly weight each instalment&#8217;s actual holding period when calculating your true return\u00a0<\/li>\n<\/ul>\n\n\n\n<ul class=\"wp-block-list\">\n<li>Avoid comparing a lump-sum fund&#8217;s CAGR directly against a SIP fund&#8217;s XIRR, since the two\u00a0aren&#8217;t\u00a0meant to be compared like-for-like\u00a0<\/li>\n<\/ul>\n\n\n\n<h2 class=\"wp-block-heading\"><span class=\"ez-toc-section\" id=\"Conclusion\"><\/span>Conclusion&nbsp;<span class=\"ez-toc-section-end\"><\/span><\/h2>\n\n\n\n<p class=\"wp-block-paragraph\">CAGR and XIRR both describe growth, but they are built for different situations, one for a single investment and the other for a stream of contributions over time. Use CAGR for lump-sum comparisons and XIRR for anything involving a SIP, and you will get a far more\u00a0accurate\u00a0read on your actual returns. Whichever way you invest, you can\u00a0<a href=\"https:\/\/www.fatakpay.com\/invest-in-mutual-funds\" target=\"_blank\" rel=\"noreferrer noopener\"><strong>invest in mutual funds<\/strong><\/a>\u00a0through\u00a0FatakPay\u00a0and track both figures directly from your portfolio dashboard.\u00a0<\/p>\n\n\n\n<h2 class=\"wp-block-heading\"><span class=\"ez-toc-section\" id=\"FAQs_on_XIRR_vs_CAGR\"><\/span>FAQs on&nbsp;XIRR vs CAGR&nbsp;<span class=\"ez-toc-section-end\"><\/span><\/h2>\n\n\n\n<h3 class=\"wp-block-heading\"><span class=\"ez-toc-section\" id=\"What_is_the_difference_between_XIRR_and_CAGR\"><\/span>What is the&nbsp;difference between&nbsp;XIRR and CAGR?&nbsp;<span class=\"ez-toc-section-end\"><\/span><\/h3>\n\n\n\n<p class=\"wp-block-paragraph\">CAGR measures the annualised growth of a single lump-sum investment, while XIRR measures the annualised return of an investment with multiple cash flows at different dates, like a SIP.&nbsp;<\/p>\n\n\n\n<h3 class=\"wp-block-heading\"><span class=\"ez-toc-section\" id=\"Which_should_I_use_for_a_SIP\"><\/span>Which should I use for a SIP?&nbsp;<span class=\"ez-toc-section-end\"><\/span><\/h3>\n\n\n\n<p class=\"wp-block-paragraph\">Always use XIRR for SIP investments, since CAGR does not account for the timing and amount of individual monthly instalments. Before starting a SIP, you can use a\u00a0<a href=\"https:\/\/www.fatakpay.com\/calculator\/sip\" target=\"_blank\" rel=\"noreferrer noopener\"><strong>SIP calculator<\/strong><\/a>\u00a0to estimate the monthly investment\u00a0required\u00a0to achieve your target corpus and then use XIRR to accurately measure the annualised return on those staggered investments.\u00a0<\/p>\n\n\n\n<h3 class=\"wp-block-heading\"><span class=\"ez-toc-section\" id=\"What_is_the_full_form_of_XIRR\"><\/span>What is the full form of XIRR?&nbsp;<span class=\"ez-toc-section-end\"><\/span><\/h3>\n\n\n\n<p class=\"wp-block-paragraph\">XIRR stands for Extended Internal Rate of Return, an extension of the standard IRR calculation that allows cash flows to occur on irregular, unevenly spaced dates.&nbsp;<\/p>\n\n\n\n<h3 class=\"wp-block-heading\"><span class=\"ez-toc-section\" id=\"Can_I_calculate_XIRR_manually\"><\/span>Can I calculate XIRR manually?&nbsp;<span class=\"ez-toc-section-end\"><\/span><\/h3>\n\n\n\n<p class=\"wp-block-paragraph\">Technically you can set it up by hand, entering each cash flow with its date (negative for investments and positive for the final value), but solving for the rate itself requires iteration, so it&#8217;s almost always done using a spreadsheet&#8217;s XIRR function or software.&nbsp;<\/p>\n\n\n\n<h3 class=\"wp-block-heading\"><span class=\"ez-toc-section\" id=\"Is_a_higher_XIRR_better\"><\/span>Is a higher XIRR better?&nbsp;<span class=\"ez-toc-section-end\"><\/span><\/h3>\n\n\n\n<p class=\"wp-block-paragraph\">Generally, yes, but it should be viewed alongside the investment horizon, since a high XIRR calculated over&nbsp;a very short&nbsp;period may not be sustainable long term.&nbsp;<\/p>\n\n\n\n<h3 class=\"wp-block-heading\"><span class=\"ez-toc-section\" id=\"Which_gives_the_true_return\"><\/span>Which gives the true return?&nbsp;<span class=\"ez-toc-section-end\"><\/span><\/h3>\n\n\n\n<p class=\"wp-block-paragraph\">For a SIP, XIRR gives the true&nbsp;return, since&nbsp;it correctly weights each instalment by its own entry date and holding period. CAGR only gives&nbsp;an accurate&nbsp;picture for a single lump-sum investment with one entry and one exit; using it for a SIP produces a misleading figure.&nbsp;<\/p>\n\n\n\n<script type=\"application\/ld+json\"> \n\n{ \n\n  \"@context\": \"https:\/\/schema.org\/\", \n\n  \"@type\": \"BreadcrumbList\", \n\n  \"itemListElement\": [ \n\n    { \n\n      \"@type\": \"ListItem\", \n\n      \"position\": 1, \n\n      \"name\": \"Home\", \n\n      \"item\": \"https:\/\/www.fatakpay.com\" \n\n    }, \n\n    { \n\n      \"@type\": \"ListItem\", \n\n      \"position\": 2, \n\n      \"name\": \"Blog\", \n\n      \"item\": \"https:\/\/www.fatakpay.com\/blog\/\" \n\n    }, \n\n    { \n\n      \"@type\": \"ListItem\", \n\n      \"position\": 3, \n\n      \"name\": \"Mutual Funds\", \n\n      \"item\": \"https:\/\/www.fatakpay.com\/blog\/mutual-funds\/\" \n\n    }, \n\n    { \n\n      \"@type\": \"ListItem\", \n\n      \"position\": 4, \n\n      \"name\": \"Difference Between XIRR and CAGR\", \n\n      \"item\": \"https:\/\/www.fatakpay.com\/blog\/mutual-funds\/xirr-vs-cagr\/\" \n\n    } \n\n  ] \n\n} \n\n<\/script> \n\n\n\n<script type=\"application\/ld+json\"> \n\n{ \n\n  \"@context\": \"https:\/\/schema.org\", \n\n  \"@type\": \"BlogPosting\", \n\n  \"mainEntityOfPage\": { \n\n    \"@type\": \"WebPage\", \n\n    \"@id\": \"https:\/\/www.fatakpay.com\/blog\/mutual-funds\/xirr-vs-cagr\/\" \n\n  }, \n\n  \"headline\": \"XIRR vs CAGR: Difference, Formula & Which to Use\", \n\n  \"description\": \"Understand XIRR vs CAGR, their key differences, formulas, and when to use each. Learn why XIRR is better for SIPs and CAGR for lump-sum investments.\", \n\n  \"image\": \"https:\/\/www.fatakpay.com\/navbar-assest\/Logo-2.png\",   \n\n  \"author\": { \n\n    \"@type\": \"Organization\", \n\n    \"name\": \"FatakPay\", \n\n    \"url\": \"https:\/\/www.fatakpay.com\/\" \n\n  },   \n\n  \"publisher\": { \n\n    \"@type\": \"Organization\", \n\n    \"name\": \"FatakPay\", \n\n    \"logo\": { \n\n      \"@type\": \"ImageObject\", \n\n      \"url\": \"https:\/\/www.fatakpay.com\/navbar-assest\/Logo-2.png\" \n\n    } \n\n  }, \n\n  \"datePublished\": \"2026-08-14\", \n\n  \"dateModified\": \"2026-08-14\" \n\n} \n\n<\/script> \n\n\n\n<script type=\"application\/ld+json\"> \n\n{ \n\n  \"@context\": \"https:\/\/schema.org\", \n\n  \"@type\": \"FAQPage\", \n\n  \"mainEntity\": [ \n\n    { \n\n      \"@type\": \"Question\", \n\n      \"name\": \"What is the difference between XIRR and CAGR?\", \n\n      \"acceptedAnswer\": { \n\n        \"@type\": \"Answer\", \n\n        \"text\": \"CAGR measures the annualised growth of a single lump-sum investment, while XIRR measures the annualised return of an investment with multiple cash flows at different dates, like a SIP.\" \n\n      } \n\n    }, \n\n    { \n\n      \"@type\": \"Question\", \n\n      \"name\": \"Which should I use for a SIP?\", \n\n      \"acceptedAnswer\": { \n\n        \"@type\": \"Answer\", \n\n        \"text\": \"Always use XIRR for SIP investments, since CAGR does not account for the timing and amount of individual monthly instalments. Before starting a SIP, you can use a SIP calculator to estimate the monthly investment required to achieve your target corpus and then use XIRR to accurately measure the annualised return on those staggered investments.\" \n\n      } \n\n    }, \n\n    { \n\n      \"@type\": \"Question\", \n\n      \"name\": \"What is the full form of XIRR?\", \n\n      \"acceptedAnswer\": { \n\n        \"@type\": \"Answer\", \n\n        \"text\": \"XIRR stands for Extended Internal Rate of Return, an extension of the standard IRR calculation that allows cash flows to occur on irregular, unevenly spaced dates.\" \n\n      } \n\n    }, \n\n    { \n\n      \"@type\": \"Question\", \n\n      \"name\": \"Can I calculate XIRR manually?\", \n\n      \"acceptedAnswer\": { \n\n        \"@type\": \"Answer\", \n\n        \"text\": \"Technically you can set it up by hand, entering each cash flow with its date, negative for investments and positive for the final value, but solving for the rate itself requires iteration, so it's almost always done using a spreadsheet's XIRR function or software.\" \n\n      } \n\n    }, \n\n    { \n\n      \"@type\": \"Question\", \n\n      \"name\": \"Is a higher XIRR better?\", \n\n      \"acceptedAnswer\": { \n\n        \"@type\": \"Answer\", \n\n        \"text\": \"Generally, yes, but it should be viewed alongside the investment horizon, since a high XIRR calculated over a very short period may not be sustainable long term.\" \n\n      } \n\n    }, \n\n    { \n\n      \"@type\": \"Question\", \n\n      \"name\": \"Which gives the true return?\", \n\n      \"acceptedAnswer\": { \n\n        \"@type\": \"Answer\", \n\n        \"text\": \"For a SIP, XIRR gives the true return, since it correctly weights each instalment by its own entry date and holding period. CAGR only gives an accurate picture for a single lump-sum investment with one entry and one exit; using it for a SIP produces a misleading figure.\" \n\n      } \n\n    } \n\n  ] \n\n} \n\n<\/script> \n","protected":false},"excerpt":{"rendered":"<p>Two investors can look at the same mutual fund&#8217;s fact sheet and arrive at&nbsp;very different&nbsp;&#8220;return&#8221; figures, depending on which metric they use and how they invested. The&nbsp;difference between&nbsp;XIRR and CAGR&nbsp;matters once you move beyond a single lump-sum investment into regular SIP contributions, since each metric is built to measure a different kind of cash flow<\/p>\n","protected":false},"author":1,"featured_media":0,"comment_status":"closed","ping_status":"closed","sticky":false,"template":"","format":"standard","meta":{"footnotes":""},"categories":[697],"tags":[],"class_list":["post-12081","post","type-post","status-publish","format-standard","category-mutual-funds"],"_links":{"self":[{"href":"https:\/\/www.fatakpay.com\/blog\/wp-json\/wp\/v2\/posts\/12081","targetHints":{"allow":["GET"]}}],"collection":[{"href":"https:\/\/www.fatakpay.com\/blog\/wp-json\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/www.fatakpay.com\/blog\/wp-json\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/www.fatakpay.com\/blog\/wp-json\/wp\/v2\/users\/1"}],"replies":[{"embeddable":true,"href":"https:\/\/www.fatakpay.com\/blog\/wp-json\/wp\/v2\/comments?post=12081"}],"version-history":[{"count":1,"href":"https:\/\/www.fatakpay.com\/blog\/wp-json\/wp\/v2\/posts\/12081\/revisions"}],"predecessor-version":[{"id":12083,"href":"https:\/\/www.fatakpay.com\/blog\/wp-json\/wp\/v2\/posts\/12081\/revisions\/12083"}],"wp:attachment":[{"href":"https:\/\/www.fatakpay.com\/blog\/wp-json\/wp\/v2\/media?parent=12081"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/www.fatakpay.com\/blog\/wp-json\/wp\/v2\/categories?post=12081"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/www.fatakpay.com\/blog\/wp-json\/wp\/v2\/tags?post=12081"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}