IRR & XIRR Calculator

The return your own money earned, given the dates you actually added and took it. A statement shows balances. A fund fact sheet shows the fund's time-weighted return, which ignores your deposits and withdrawals. Neither tells you what a rental, a private partnership or your IRA has earned for you, once the rollover in one year, the repair in another and the withdrawals every January are counted. IRR does, and XIRR does it with exact dates.

That matters more after 60 than before. In the saving years, money mostly flows one way and simple returns are close enough. Once withdrawals begin, the timing of each one moves the result: a large withdrawal after a market fall locks in the loss, and a money-weighted return shows it. The same is true of the decisions this reader tends to face, such as whether to keep a rental, whether an annuity quote is fair, or whether an adviser's fee has been earned. Each is a question about cash flows on dates, and each has an IRR.

With XIRR and a year or more of statements. Pick a start date and enter the account value on that date as a negative flow, as if you had just bought the whole account. Then enter every flow since:

• Money in is negative. Contributions, catch-up contributions, rollovers from a 401(k), transfers from another account.
• Money out is positive. Withdrawals, required minimum distributions, qualified charitable distributions and Roth conversions out of a traditional IRA. Use the gross amount that left the account, including any federal or state tax withheld.
• Today's balance is the last positive flow, dated today.

Leave out dividends and interest that stayed in the account, and fees deducted from it: they are already in the balance. A fee you pay by check from another account is a real cost of this one, so enter it as a negative. The calculator's Dated mode opens on a hypothetical IRA worth $900,000 in January 2020, with one $7,000 contribution, withdrawals of $45,000 to $52,000 a year from 2022, and a balance of $1,010,000 on September 1, 2026. Its XIRR is 5.41% a year.

For a household with several accounts, run each one and then all of them together, with transfers between accounts left out. A Roth conversion counts as money out of the traditional IRA and money into the Roth; across both accounts it cancels. If you are weighing conversions, the guide to Roth conversions before RMDs covers the tax side.

The return on keeping a property is the return on what you could sell it for now, not on what you paid. That is the most common mistake in a keep-or-sell decision. A condo bought for $240,000 in 2011 and worth $430,000 net of selling costs today has, in effect, $430,000 of your money in it. Keeping it is the same as buying it again at that price.

So run the calculator twice. First, the history: the purchase, every year of net rent, each major repair, and today's net sale value as the last flow, in Dated mode. In the worked example on this page that history is an XIRR of 6.97% a year. Second, the future: today's net sale value as a negative, a realistic net rent for each year you might keep it, and an estimated sale price net of costs at the end. With $14,000 of rent a year and the property gaining 3% a year, five more years return 6.08%; at 2% a year, 5.14%.

Set the NPV discount rate to what the money would earn in a balanced fund you would not have to manage, and let the result settle the investment question. Then weigh what the IRR leaves out: tenants and repairs in your seventies, and the concentration of a large share of your wealth in one building. Taxes can point the other way. On a sale, gain from depreciation you took is taxed at up to 25% (IRS), while heirs who inherit property generally take its value on the date of death as their basis (IRS). The guide to downsizing in retirement covers the rest of the move.

It depends on how long you collect. An income annuity quote shows a payment, not a rate of return, and the rate is only knowable in hindsight. The IRR at different lifespans shows what you are buying. For a hypothetical $200,000 premium paying $13,000 a year, with the first payment a year after purchase:

The pattern explains annuities better than any sales brochure. They are poor investments for people who die early and good insurance for people who live long. A fixed payment also loses buying power: at 3% inflation, the 25-year IRR of 4.15% is about 1.11% a year after inflation. Load the "Annuity to age 85" example, change the amounts to your own quote, and add or remove years to see the range. The same method values a pension: enter the lump sum you would give up as the negative flow and the monthly or yearly pension as the positives. The guide to pension lump sum vs. annuity walks through that choice.

Roughly the whole fee, every year. A fee of 1% of assets, deducted from the account, lowers your money-weighted return by about one percentage point. On a $1.5 million account that is $15,000 in the first year, and over time the difference compounds: $1.5 million growing at 6% a year for 20 years becomes $4.81 million, and at 5% it becomes $3.98 million, a gap of about $831,000 before any withdrawals.

Your XIRR is the fair way to judge whether the fee is earned. Compare it with what a low-cost index fund mix of similar risk returned over the same dates, run through the same flows. If the adviser adds planning, tax work or estate coordination you value, some shortfall may be worth paying for. If the XIRR trails the simple alternative and the service is mainly portfolio management, the numbers make the case on their own.

• Taxes. The result is before tax unless you enter after-tax flows. For a rental sale, the after-tax proceeds are the honest last flow; for an IRA, remember that every dollar in a traditional account still carries income tax.
• Inflation. IRR is a nominal rate. To convert it, divide (1 + IRR) by (1 + inflation) and subtract 1. The inflation calculator shows how prices have moved over your holding period.
• Reinvestment. IRR assumes interim cash was reinvested at the IRR itself. If you spent the rent, the figure still describes the investment fairly, but not what your total wealth earned.
• Risk and effort. Two investments with the same IRR are not equal if one is a diversified fund and the other a single building with tenants.
• Day count. XIRR measures time from the first date over a 365-day year, the same convention as Excel (Microsoft). Periodic IRR converts a monthly or quarterly rate to a yearly one by compounding.

The Excel template uses Excel's own IRR, NPV and XIRR functions on the same inputs, so its results match this page. For how a measured return feeds a withdrawal plan, see the guide to retirement withdrawal order.