03-06-2025, 06:20 AM
Hey everyone,
I’ve seen a lot of confusion around calculating mutual fund returns accurately, especially when it comes to SIP (Systematic Investment Plan). Many new investors assume that the returns they see on the fund's website or app reflect their own performance—but that’s not always the case. That's why I wanted to start a discussion around using the XIRR Calculator to understand your actual SIP returns.
SIP is one of the most popular investment strategies for retail investors, and rightly so. It allows you to invest small amounts regularly, benefit from rupee cost averaging, and build wealth over time. However, since SIP involves multiple transactions over different dates, calculating returns isn't as simple as looking at a fixed interest rate.
This is where the XIRR (Extended Internal Rate of Return) comes in. It's a formula that calculates the annualized return considering irregular cash flows—which is exactly what happens in SIPs. Most mutual fund platforms and Excel offer built-in XIRR calculators, and trust me, using them can change how you view your investments.
For instance, if you’ve been investing ₹5,000 monthly for the past 3 years, the total invested amount is ₹1.8 lakhs. Let’s say your current value is ₹2.2 lakhs. Using a basic CAGR formula won’t give you the right picture since it doesn’t factor in the timing of cash flows. The XIRR Calculator will give you a more accurate percentage return based on when each SIP was made and what it's worth today.
I personally use Google Sheets to maintain my SIP records and use the XIRR function to evaluate how my different funds are performing. It’s incredibly helpful in making decisions about whether to continue, pause, or switch funds.
So, has anyone else here tried calculating their SIP returns using XIRR? Do you think it's more accurate than just looking at fund performance on platforms?
Let’s discuss! Share your experiences, tools you use, or even templates—this could help a lot of new investors make smarter decisions.
Looking forward to your replies.
I’ve seen a lot of confusion around calculating mutual fund returns accurately, especially when it comes to SIP (Systematic Investment Plan). Many new investors assume that the returns they see on the fund's website or app reflect their own performance—but that’s not always the case. That's why I wanted to start a discussion around using the XIRR Calculator to understand your actual SIP returns.
SIP is one of the most popular investment strategies for retail investors, and rightly so. It allows you to invest small amounts regularly, benefit from rupee cost averaging, and build wealth over time. However, since SIP involves multiple transactions over different dates, calculating returns isn't as simple as looking at a fixed interest rate.
This is where the XIRR (Extended Internal Rate of Return) comes in. It's a formula that calculates the annualized return considering irregular cash flows—which is exactly what happens in SIPs. Most mutual fund platforms and Excel offer built-in XIRR calculators, and trust me, using them can change how you view your investments.
For instance, if you’ve been investing ₹5,000 monthly for the past 3 years, the total invested amount is ₹1.8 lakhs. Let’s say your current value is ₹2.2 lakhs. Using a basic CAGR formula won’t give you the right picture since it doesn’t factor in the timing of cash flows. The XIRR Calculator will give you a more accurate percentage return based on when each SIP was made and what it's worth today.
I personally use Google Sheets to maintain my SIP records and use the XIRR function to evaluate how my different funds are performing. It’s incredibly helpful in making decisions about whether to continue, pause, or switch funds.
So, has anyone else here tried calculating their SIP returns using XIRR? Do you think it's more accurate than just looking at fund performance on platforms?
Let’s discuss! Share your experiences, tools you use, or even templates—this could help a lot of new investors make smarter decisions.
Looking forward to your replies.