## The Simple Difference

### 📊 CAGR

**Compound Annual Growth Rate**  
Assumes you invested a lump sum at the start and held until the end. Ignores all cash flows in between.

### 📈 XIRR

**Extended Internal Rate of Return**  
Accounts for every buy and sell with exact dates. Shows true annualized return on your actual cash flows.

## A Real Example

Let's say you invested in stocks like this:

| Date       | Action      | Amount   |
|------------|-------------|----------|
| Jan 2022  | Invested    | -₹50,000 |
| Jun 2022  | Invested    | -₹30,000 |
| Dec 2023  | Sold All    | +₹1,00,000 |

Your total profit is ₹20,000 on ₹80,000 invested = 25% return. But wait...

#### CAGR Calculation

~11.8%  
Assumes ₹80k invested at start

#### XIRR Calculation

~15.2%  
Accounts for ₹30k added later

**XIRR is higher** because ₹30,000 was invested 6 months later—it had less time to grow, so the same profit means a higher annualized return!

## When Does This Matter?

- **SIP investors** — You add money monthly, CAGR is wrong
- **Active traders** — Multiple buys and sells, CAGR is useless
- **Partial exits** — Sold some holdings? CAGR can't handle it

### 🎯 Bottom Line

**CAGR is for lump-sum investors. XIRR is for everyone else.** If you've ever added money to your portfolio or sold partially, you need XIRR to know your real returns.

## Why Your Broker Shows CAGR

Brokers often show CAGR because it's simpler to calculate. But for retail investors who invest over time, it's almost never accurate.

That's why we built TrueXIRR—to give you the _real_ picture of your returns.

### Calculate Your True XIRR

Upload your tradebook and know your real annualized returns. Free & private.

[Calculate\
XIRR Now →](/content/site-root.html)