Calculate your actual annualized investment returns.
Use CAGR for lumpsum investments, XIRR for SIP / step-up SIP investments.
CAGR (Annualized Return)
Absolute Return
Total Returns
Wealth Multiplier
Where Years = total duration including months (e.g., 5 years 6 months = 5.5 years).
Example: ₹5,00,000 invested, current value ₹12,00,000 after 5 years:
CAGR = (12,00,000 / 5,00,000)^(1/5) − 1 = 2.4^0.2 − 1 = 19.1%
| Metric | Formula | Best Used For |
|---|---|---|
| Absolute Return | (FV − Invested) / Invested × 100 | Total gain regardless of time |
| CAGR | (FV/Invested)^(1/years) − 1 | Comparing investments of different durations |
| XIRR | NPV(cashflows) = 0 | SIP / irregular investments |
XIRR (Annualized Return)
CAGR (for reference)
Total Invested
Total Returns
Absolute Return
XIRR solves for the monthly rate r that makes the Net Present Value (NPV) of all cash flows equal to zero:
Then the annual XIRR = (1 + r)^12 − 1. This is solved numerically (Newton-Raphson method).
EAR convention: Both calculators use EAR (Effective Annual Rate) monthly compounding — monthly rate = (1 + annual rate)^(1/12) − 1. At 12% annual: monthly rate = 0.9489%, not 1%. This matches the international standard used by most US/UK investment platforms, and means XIRR will show 12.00% when your portfolio performs at exactly the rate you entered in the SIP calculator.
Why XIRR ≠ CAGR for SIP? In a SIP, money is invested at different times — early payments compound for longer, late payments for shorter. XIRR accounts for this timing, making it more accurate than simple CAGR.
🌐 Works globally: XIRR is the correct return metric for any regular monthly investment plan — whether called SIP (India), Dollar Cost Averaging / DCA (US, Canada, Australia), RSP / Regular Savings Plan (UK, Singapore), or AIP / Automatic Investment Plan (SE Asia). The XIRR formula and calculation are identical for all of them.
| Scenario | CAGR | XIRR | Which to Trust? |
|---|---|---|---|
| Lumpsum investment | Accurate | Same as CAGR | Either |
| Regular SIP (flat) | Overstates returns | Accurate | XIRR |
| Step-up SIP | Can overstate | Accurate | XIRR |
| Irregular investments | Not applicable | Accurate | XIRR |
CAGR (Compound Annual Growth Rate) measures the annualized return assuming money was invested as a single lumpsum at the start. XIRR (Extended Internal Rate of Return) accounts for the fact that SIP investments are made monthly — each installment earns returns for a different duration. For SIPs, XIRR is the correct metric because it considers the timing of each cash flow, while CAGR would overstate your actual returns.
With a SIP, your early payments compound for longer, but later payments have less time to grow. CAGR treats the entire invested amount as if it was there from day one, which is inaccurate. XIRR properly accounts for this timing effect — for a 10-year SIP at 12% CAGR on total invested, the true XIRR is typically 11-12% because only the first installment enjoys the full 10-year compounding.
Compare your fund's XIRR against: (1) The fund's benchmark index return, (2) Category average returns, (3) Risk-free rate (FD rate ~7%). If your SIP XIRR is 12%+ over 5+ years in an equity fund, that's generally good performance. For debt funds, 7-9% XIRR is typical. Most Indian fund apps show your portfolio XIRR.
Benchmarks: Bank FD ≈ 6-7% CAGR, Debt mutual funds ≈ 7-9% CAGR, Hybrid/balanced funds ≈ 10-12% CAGR, Large-cap equity funds ≈ 11-14% CAGR, Mid/small-cap equity funds ≈ 14-18% CAGR (higher risk), Nifty 50 index ≈ 13% long-term CAGR. Any CAGR above the inflation rate (6-7%) means you're creating real wealth.
Yes — for lumpsum investments in mutual funds, the CAGR calculator is perfect. Enter the NAV-based invested amount, current market value, and the number of years held. For SIP investments, use the XIRR calculator instead. Most mutual fund performance data you see in advertisements is expressed as CAGR over 1, 3, 5, and 10 years.
A step-up SIP increases your monthly contributions over time. This means more money is invested in later years, which compounds for fewer years. However, the increased amounts also contribute to higher absolute wealth. Your XIRR with step-up SIP is typically similar to flat SIP XIRR (for the same fund), but you build significantly more wealth due to the larger total investment. The XIRR calculator here properly handles step-up by modeling each month's actual SIP amount.
This happens when your SIP investments were calculated using the APR convention (monthly rate = annual rate ÷ 12), which is used by most Indian investment apps. At 12% annual:
If your SIP was projected using EAR convention (international standard), monthly rate = (1.12)^(1/12) − 1 = 0.9489%/month, and XIRR will show exactly 12.00%. Switch the mode in the SIP calculator using the EAR/APR toggle to match your scenario.
Both APR and EAR are ways to express an annual interest rate, but they differ in how they relate to the monthly compounding used in SIP math:
| Convention | Monthly Rate (at 12%) | Effective Annual | Platforms |
|---|---|---|---|
| APR | 12% ÷ 12 = 1.0000% | 12.6825% | Most Indian investment apps |
| EAR | (1.12)^(1/12)−1 = 0.9489% | 12.0000% | Most international investment platforms |
EAR is more mathematically precise — it guarantees the monthly compounding delivers exactly the annual rate you stated. APR is simpler but the actual annual return is slightly higher (12.68% at 12% APR). Neither is "wrong" — they are different conventions. Our SIP & Goal calculators let you toggle between both.
Three reasons:
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