XIRR is the money-weighted annual rate of return of a series of dated cash flows. It is the internal rate of return r such that the net present value of all buys, sells, dividends, coupons and the end value equals zero on a 365-day year basis (Excel =XIRR).

How does XIRR differ from TWR?

XIRR answers how strongly your own capital compounded, including the timing of deposits and withdrawals. TWR (time-weighted return) removes timing so you can compare the investments themselves to an index.

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What is XIRR? The honest money-weighted return

Broker screens often show price change only. XIRR answers: how strongly did your capital compound, with every cash flow on the right date.

1. Definition

XIRR (extended internal rate of return) is the annual money-weighted rate r that makes the net present value of all dated cash flows zero — buys negative, dividends/coupons/sales/end value positive — on a 365-day year (Excel =XIRR / German Excel =XINTZINSFUSS).

2. Formula

Σ CF_t / (1 + r)^((t − t0) / 365) = 0

Solved numerically (Newton–Raphson with bisection fallback). Unlike a simple “end ÷ start − 1”, timing of a mid-year top-up or dividend matters.

3. Mini example

Date	Cash flow
15 Jan 2025	−€10,000 buy
15 Jan 2026	+€450 dividend
15 Jan 2026	+€10,800 end value

Simple return ≈ +12.5%. XIRR annualises with exact day counts — try it in the free XIRR calculator (DE/EN switcher on the page).

German deep-dive: XIRR-Leitfaden (DE).