What does XIRR mean ?
• XIRR is annualized rate of return or the rate at which your portfolio is growing on a per annum basis.
• It is well recognized performance metrics by mutual fund industry and other fintech platforms such as Groww, Zerodha, etc.
Why is it better than CAGR ?
• As an investor, you keep doing multiple transactions at different times like SIP, ad-hoc lumpsum & withdrawals.
• XIRR considers not only the initial investment but also the subsequent inflows and outflows over time for evaluating returns.
• CAGR is however point to point returns, eg. initial investment to current value. Hence it cannot be used in case of multiple cash flows.
Who is it better for ?
• For long term investors, XIRR is the best way to measure portfolio performance.
• If your investments have been less than 1 year, XIRR can vary higher on +/- side.
• Hence XIRR is generally considered a better metrics when your invested period is more than a year.
Where can you see your XIRR performance ?
• Latest update of MIRA Money application available on the Appstore.
• You will see XIRR % on the home screen and the investment dashboard.