IRR & XIRR Calculator

Q: Why does IRR differ from ROI?

ROI ignores time; IRR is built around it. A 60% total return sounds identical whether it took three years or ten, but the IRR would be 17% in the first case and under 5% in the second. When money went in at different times, ROI also cannot tell you which dollars earned the return, which is where IRR and XIRR take over.

Find the true annual return on any series of cash flows, whether they land every year or on random dates, and see the NPV and profit multiple alongside it.

The Return Number That Respects Time

What Is the Internal Rate of Return?

Every investment is a series of cash flows: money leaving your pocket at some dates, money coming back at others. The internal rate of return is the single yearly interest rate that makes all those flows balance out. Technically, it is the discount rate at which the net present value equals zero.

A plainer way to say it: IRR is the interest rate a bank account would have to pay for you to end up with the same money, given the exact deposits and withdrawals you made. Put $10,000 in and take out $2,000, $3,000, $4,000, and $5,000 over four years, and the IRR is 12.8%.

There is no formula you can solve by hand. The rate has to be found by trial and error, which is what Excel's IRR and XIRR functions do behind the scenes, and what this calculator does with Newton's method and a bisection fallback.

Key Insight: IRR is the only return figure that gives a fair answer when money went in at different times. Simple ROI and CAGR both assume one lump sum at the start, which is rarely how real investing works.

IRR vs. CAGR vs. Simple ROI

These three numbers answer different questions. Pick the one that matches the shape of your cash flows.

Measure	Accounts for time?	Handles multiple cash flows?	Best for
Simple ROI	No	No	Quick gut check on total gain
CAGR	Yes	No, one in and one out	Lump-sum investments, index comparisons
IRR / XIRR	Yes	Yes, any number and timing	Rentals, private deals, accounts with contributions

When there is exactly one cash flow in and one out, IRR and CAGR give the same answer. The moment a second contribution or an interim payout appears, only IRR stays honest. For the lump-sum case, our ROI & CAGR calculator is the simpler tool.

When You Need XIRR Instead of IRR

Plain IRR assumes every cash flow is exactly one period apart: year one, year two, year three. That fits a bond or a lease. It does not fit most of real life.

Rental property: a purchase, a roof repair 27 months later, rent every month, a sale on an arbitrary closing date
Private investments: capital calls and distributions whenever the fund decides
Your brokerage account: paycheck contributions, a bonus lump sum, a withdrawal for a down payment

XIRR takes each flow's calendar date and measures the exact number of days between them, using a 365-day year the same way Excel does. That is why your brokerage's "personal rate of return" is really an XIRR, and why it can differ from the fund's published return even if you own only that one fund.

Pro Strategy: Export your account's transaction history, paste every deposit and withdrawal with its date, add today's balance as a final positive flow, and you have your true money-weighted return. Compare it with the fund's time-weighted return to see whether your timing helped or hurt.

Money-Weighted vs. Time-Weighted Return

IRR is a money-weighted return. Big cash flows count more than small ones, so a large deposit right before a downturn drags the number down. That is a feature: it measures what happened to your dollars.

Fund fact sheets report time-weighted returns instead. That method strips out the effect of deposits and withdrawals, because the fund manager doesn't control when investors add money. It answers "how good was the manager?" while IRR answers "how did I do?"

Both are correct. If your money-weighted return trails the fund's time-weighted return, your contribution timing worked against you, often because the biggest deposits arrived after strong years. If it leads, you added money at good moments or simply kept a steady schedule through a dip.

Three Ways IRR Can Mislead You

1. It assumes reinvestment at the IRR. A deal that pays out early and shows a 30% IRR silently assumes you reinvested those payouts at 30%. You probably didn't. The higher the IRR and the earlier the cash comes back, the more this inflates the picture.

2. Multiple sign changes can produce multiple IRRs. If cash goes out, comes in, and goes out again (a rental with a big repair, for instance), the math can have two valid answers or none. The calculator flags more than one sign change so you know to sanity-check the result with NPV.

3. It is blind to scale. A 40% IRR on $1,000 is $400. A 12% IRR on $200,000 is $24,000. IRR alone can't tell you which matters more to your life, which is why the calculator also reports NPV at a discount rate you choose and the multiple on invested capital.

Avoid These Costly Mistakes

❌ Entering every flow as positive (the solver needs money out to be negative)
❌ Forgetting the current balance as the final positive cash flow for an account you still hold
❌ Leaving out repairs, closing costs, capital calls, and taxes paid along the way
❌ Comparing a monthly IRR against an annual benchmark without annualizing
❌ Trusting a sky-high IRR on a deal that returned cash early and fast
❌ Choosing between two investments on IRR alone when their sizes differ wildly

Your IRR Action Plan

Pull every cash flow from statements, not memory, including fees and repairs
Mark money out as negative and money back as positive
Use dated (XIRR) mode unless the flows are truly evenly spaced
For an investment you still own, add today's value as the last positive flow
Compare the annualized result with what an index fund did over the same span
Check NPV at your required return; a positive NPV means the deal beat your hurdle

Frequently Asked Questions

IRR is the yearly interest rate your money actually earned, after accounting for exactly when each dollar went in and came out. Put $10,000 in, get $2,000, $3,000, $4,000, and $5,000 back over four years, and your IRR is 12.8%. A savings account paying 12.8% with the same deposits and withdrawals would leave you with the same balance.

IRR assumes cash flows land at evenly spaced intervals; XIRR uses the actual calendar dates. If you invested on January 15, added more on September 1, and cashed out two and a half years later, IRR cannot represent that. XIRR measures the gap between each date in days, which is why Excel and most brokerages use it for real accounts.

Judge IRR against what the same money would have earned in a comparable alternative, not against an absolute number. US stocks have compounded at roughly 10% a year since 1928, so an illiquid, hands-on investment should clear that with room to spare. A 9% IRR on a rental that consumed weekends is a worse deal than 9% from an index fund you never touched.

ROI ignores time; IRR is built around it. A 60% total return sounds identical whether it took three years or ten, but the IRR would be 17% in the first case and under 5% in the second. When money went in at different times, ROI also cannot tell you which dollars earned the return, which is where IRR and XIRR take over.

A negative IRR means you got back less than you put in, measured as a yearly rate of loss. Invest $10,000 and receive three payments of $3,000, and the IRR is about -5% a year. The calculator reports negative results normally; if it cannot find any rate at all, it usually means every cash flow has the same sign.

List every cash flow with its sign, then find the rate that makes their present values sum to zero. There is no closed formula, so the calculator iterates using Newton's method and falls back to bisection when needed. Enter your amounts above, negative for money out and positive for money back, and the rate appears instantly.