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Understanding XIRR: A Simple Guide
XIRR (Extended Internal Rate of Return) calculates the annualized return on investments with multiple cash flows occurring on different dates. This helps in accurately comparing returns when you make varied investments and withdrawals over time.
A Quick Example:
Jan 1, 2020: Invest ₹10,000 (represented as -10,000)
Jan 1, 2021: Invest ₹5,000 (represented as -5,000)
Jan 1, 2023: Withdraw ₹20,000 (represented as +20,000)
For these transactions, the XIRR is approximately 25.4% annually.

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How to Calculate XIRR
Using Excel / Google Sheets (Simple Steps):
Column A: List all amounts. Investments should be negative (e.g., -10000), and withdrawals positive (e.g., +20000).
Column B: Enter the exact date for each corresponding amount (e.g., dd-mm-yyyy or dd-mmm-yyyy).
Formula: In any empty cell, type =XIRR(A2:A4, B2:B4) and press Enter. (Adjust cell ranges as needed).
Optional: For complex scenarios, you can add a "guess" to the formula: =XIRR(values, dates, guess).
Tip: Always ensure your amounts and dates are in chronological order and align correctly in their respective rows.

Using Online Calculators (Paste & Go):
Several online tools allow you to quickly calculate XIRR by simply pasting your dates and amounts, click on the name to get to their website page:
Groww XIRR calculator
Calculat XIRR calculator
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Important Notes on XIRR:
Cash Flow Representation: Negative values indicate money invested, while positive values represent money received.
Annualized Rate: XIRR provides an annualized rate of return, not your total profit.
Versatility: It is effective for scenarios involving multiple deposits and withdrawals at various points in time.

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