XIRR of ELSS Tax-Saving SIP (3-Year Lock-in)

Technically, tax saving is a benefit but not a cash flow in the ELSS fund itself. For a pure fund XIRR, use only your investment instalments and final redemption value. However, if you want to measure your overall financial return (including tax saved), add the tax benefit as a positive cash flow in year 1.

XIRR (Extended Internal Rate of Return) is the annualised return on investments with irregular cash flows on specific dates. Unlike CAGR, it accounts for the exact dates of each investment and withdrawal. It is the standard method used by mutual fund houses and AMCs to report SIP returns.

CAGR is suitable for a single lump sum investment held for a fixed period. XIRR is for multiple cash flows on different dates, such as monthly SIPs or staggered investments. For a regular SIP, CAGR will overstate returns if used incorrectly, because you did not invest the entire amount on day one. XIRR gives the accurate per-year return for irregular investment patterns.

A 12-15% XIRR on an equity SIP over 10+ years is generally considered good for Indian markets, broadly in line with the Nifty 50 long-term average. Large-cap funds typically deliver 10-13%, mid-cap and small-cap funds may deliver higher returns with more volatility. Compare your XIRR to the benchmark return of the fund category.

List every SIP instalment as a negative cash flow with its exact date, then add the current NAV or redemption value as a positive cash flow with today's date (or the redemption date). Enter these in the XIRR calculator above. The calculator solves for the annualised return using Newton-Raphson iteration.

A negative XIRR means your investment has lost value on an annualised basis: you put in more money than the current worth of your portfolio. This can happen after a significant market fall, or if you invested near a market peak and are evaluating returns over a short period. A negative XIRR does not necessarily mean you should exit; market cycles often recover over longer horizons.