XIRR vs CAGR: Which return metric should Indian investors trust?
Last reviewed: 2026-02-28
Direct answer
Use CAGR for single lump-sum investments without intermediate cash flows. Use XIRR for real-world portfolios with multiple buys/sells/SIPs. For decision quality, pair return metric with post-tax outcome checks through LTCG/STCG calculators.
Why this matters
Many investors optimize only gross return. In practice, the better decision is often the one with better after-tax return and cash-flow timing. That is why XIRR + tax planning beats simple percentage comparisons.
Practical workflow
- Measure portfolio-level performance using XIRR.
- Estimate exit-tax outcomes with LTCG and STCG calculators.
- Choose actions based on post-tax, time-adjusted return.
Tools to apply this today
- XIRR Calculator for timing-aware return measurement.
- LTCG Tax Calculator for long-term exits.
- STCG Tax Calculator for short-term exits.