XIRR in Mutual Funds: The Secret Sauce Behind Your SIP Returns 🍲💰

“Your mutual fund is up 12% XIRR.” Sounds fancy, right? But what does it even mean? Is it interest? Is it magic? Or is it just another number to confuse us? Let’s break it down  1. XIRR is NOT simple interest. If you put ₹1 lakh in January and another ₹1 lakh in July, and by December your portfolio shows ₹2.3 lakh, how do you calculate returns? Simple % won’t work (because money went in at different times). CAGR (Compounded Annual Growth Rate) assumes one-time investment. Doesn’t fit either. 👉 That’s where XIRR (Extended Internal Rate of Return) steps in. It adjusts for cash inflows + timing + compounding , and gives you the true annualized return .   2. CAGR vs XIRR – The Sibling Rivalry 📊 People love quoting CAGR (Compounded Annual Growth Rate). CAGR works great for one-time lump-sum investments. But SIPs? Multiple cash inflows? CAGR fails miserably. That’s when XIRR = CAGR’s smarter cousin walks in. 💡 It’s designed to handle messy cash flows. XIRR is basically: 💡 “...
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