0%
The compounded annual growth rate (CAGR) is a common metric to measure the growth of an investment, however, it is not suitable for investments where multiple transactions take place.
Imagine an individual has invested a fixed sum monthly for 36 months. With the help of CAGR, one can easily measure the growth of the mutual fund at the end of 36 months. However, for personal investments, one will need to calculate the CAGR for each individual investment. Hence, using an XIRR calculator for SIP makes this process easy and provides investors with a more accurate rate of return on their investments.
Using the XIRR calculator can benefit you in the following ways:
Unlike CAGR Calculator, which uses the traditional method of calculating your investment returns, XIRR Calculator can help investors easily calculate the returns of their investment where multiple transactions take place. This can be particularly useful for investments like mutual funds, SIPs, or any investment strategy where contributions and withdrawals are not uniform.
With the XIRR calculator, an investor can get the annualised rate of return on their investment. This helps them understand the growth rate of their investments on an annual basis.
Along with calculating the investment return, one can use the XIRR calculator to compare and assess the performance of their investments. This helps identify which investments are generating better returns.
It can be quickly computed using Excel's XIRR function or online financial calculators, such as eUtil XIRR Calculator.