𝗫𝗜𝗥𝗥: 𝗧𝗵𝗲 𝗦𝗺𝗮𝗿𝘁 𝗜𝗻𝘃𝗲𝘀𝘁𝗼𝗿'𝘀 𝗦𝗲𝗰𝗿𝗲𝘁 𝗪𝗲𝗮𝗽𝗼𝗻

Investment history can sometimes be messy. But what’s even messier is trying to calculate your returns from that history. Introducing XIRR -  your new best friend. Unlike its cousin IRR, XIRR doesn't care when you invest or withdraw - it handles irregular cash flows like a champ.

𝗪𝗵𝗮𝘁 𝗶𝘀 𝗫𝗜𝗥𝗥?
XIRR is a very handy spreadsheet function that calculates the internal rate of return for a set of non-periodic cash flows – i.e., cash flows that are not occurring at fixed intervals of time. 

> The only data points that you need are the investment and redemption (or current value) amounts and the corresponding dates. 
> The interval between the investments need not be uniform and the amounts need not be the same. 
> There can even be multiple investments and redemptions interspersed with one another.

𝗪𝗵𝘆 𝗫𝗜𝗥𝗥 𝗥𝗼𝗰𝗸𝘀
Think about your investment style. You probably don't invest the same amount on the same day each month. Maybe you dump your bonus into investments, or pull out cash for that emergency home repair. XIRR gets it. It takes all these random movements and spits out one clean number telling you how your money's really doing.

𝗫𝗜𝗥𝗥 𝘃𝘀. 𝗖𝗔𝗚𝗥: 𝗧𝗵𝗲 𝗥𝗲𝗮𝗹 𝗦𝘁𝗼𝗿𝘆
You know those impressive fund advertisements showing 5-year CAGR of 17%? That's great if you invested once and never touched your money again. But let's be real - that's not how most of us invest. XIRR gives you the true picture of your returns, considering every deposit and withdrawal you've made.

𝗘𝘃𝗮𝗹𝘂𝗮𝘁𝗲 𝗣𝗼𝗿𝘁𝗳𝗼𝗹𝗶𝗼 𝗣𝗲𝗿𝗳𝗼𝗿𝗺𝗮𝗻𝗰𝗲 
Let's say you've got money spread across different funds. One's crushing it with 20% returns, another's down 10%. How's your portfolio really doing? XIRR tells you how your portfolio is faring overall. 
Using XIRR: It's Easier Than You Think

𝗥𝗲𝗮𝗱𝘆 𝘁𝗼 𝘂𝘀𝗲 𝗫𝗜𝗥𝗥? 
> Open your spreadsheet
> List your investment dates
> Enter investments as negative numbers (since it goes out of your account - outflow)
> Put withdrawals or current value as positive numbers (since this comes into your account - inflow)
> Let XIRR do its magic

𝗙𝘂𝗻 𝗳𝗮𝗰𝘁: Calculators can’t handle XIRR - it needs a computer to crunch those numbers through trial and error. But your spreadsheet makes it look easy!

For detailed steps on how to use the XIRR function and to download a very handy spreadsheet that you can just populate with your investment / redemption details to arrive at the XIRR, head to the article here:𝘙𝘦𝘢𝘥 𝘰𝘶𝘳 𝘥𝘪𝘴𝘤𝘭𝘰𝘴𝘶𝘳𝘦𝘴 𝘢𝘯𝘥 𝘥𝘪𝘴𝘤𝘭𝘢𝘪𝘮𝘦𝘳𝘴 𝘢𝘵 𝘵𝘩𝘦 𝘦𝘯𝘥 𝘰𝘧 𝘵𝘩𝘪𝘴 𝘱𝘢𝘨𝘦𝘢𝘯𝘥 𝘢𝘭𝘴𝘰 𝘩𝘦𝘳𝘦#XIRR #FinancialLiteracy #InvestmentReturns #PortfolioManagement #SpreadsheetTips #InvestmentMetrics #PrimeInvestor