https://v2.webnotes.in/tags/xirr-sip/Recent content in XIRR SIP on WebNotesHugoen-INMon, 18 May 2026 00:00:00 +0000https://v2.webnotes.in/xirr-sip/Mon, 18 May 2026 00:00:00 +0000https://v2.webnotes.in/xirr-sip/<p><strong>XIRR (Extended Internal Rate of Return)</strong> is the correct method to compute annualised returns on SIP investments, properly accounting for the time-value of each periodic instalment. Unlike CAGR (which assumes single-investment-single-withdrawal), XIRR handles the multiple-cash-flow nature of SIPs.</p> <h2 id="why-xirr-for-sips">Why XIRR for SIPs</h2> <p>SIP investing involves:</p> <ul> <li><strong>Multiple monthly investments</strong>: Each at different NAV.</li> <li><strong>Different holding periods per instalment</strong>: Earliest instalment has longest holding period; latest has shortest.</li> <li><strong>Different time-value of cash flows</strong>: Money invested 5 years ago vs 1 year ago.</li> </ul> <p>CAGR over the full SIP period would treat all the invested money as if it were a single lump-sum at SIP start, materially misstating the actual return.</p>