CAGR vs XIRR: What Changes When You Add Money?
CAGR compares a starting and ending value over time. XIRR includes the amount and date of intervening cash flows. Adding savings can increase your balance even when the investment earns nothing, so the same two endpoint values do not always describe an investment return.
| Question | Use | What it accounts for |
|---|---|---|
| How fast did one unchanged investment grow? | CAGR calculator | Starting value, ending value and elapsed years |
| What annualised return did my dated deposits earn? | Contribution-only XIRR calculator | Amount and date of each deposit plus ending value |
| What could my regular savings grow to? | Investment growth calculator | A future rate assumption and contribution plan |
Example 1: a larger balance with zero investment return
Put in 10,000 on January 1, 2023, add 10,000 on January 1, 2024, and finish with 20,000 on January 1, 2025. You deposited all 20,000. The gain is zero and XIRR is 0%.
A naive calculation using 10,000 as the starting value and 20,000 as the ending value reports about 41.3543% annual growth over 731/365 years. That describes the changing account balance while ignoring the new deposit; it is not the investment's earned return. The date-based period includes the 2024 leap day.
Example 2: measure growth and contribution timing separately
Start with 10,000 on January 1, 2023, add 5,000 on January 1, 2024 and finish with 18,000 on January 1, 2025. Deposits total 15,000 and the gain is 3,000. The 20% increase above deposits is not annualised. The contribution-aware annualised return is approximately 11.4538%.
The earlier 10,000 has almost two years to compound, while the later 5,000 has about one. XIRR finds one annual effective rate connecting both deposits to the terminal value, using actual day counts divided by 365. These are independently checked hypothetical examples; no future return is implied.
How the formulas differ
CAGR = (ending value / starting value)1/years − 1. It does not include intermediate cash flows. XIRR solves the discounted cash-flow equation Σ CFk / (1+r)daysk/365 = 0. Deposits are cash outflows and the final value is a cash inflow from the investor's perspective. The official Microsoft XIRR specification documents actual dates and a 365-day denominator.
Why XIRR and a fund's return can disagree
XIRR is money-weighted: the amounts and timing of your deposits influence it. Time-weighted performance instead joins returns between cash flows to remove that timing effect. Without valuations between deposits, this page cannot reconstruct a time-weighted return or determine whether a fund outperformed a benchmark.
What about withdrawals, fees and dividends?
A full XIRR calculation can include withdrawals and distributions as positive cash flows, but repeated sign changes can produce more than one rate or no useful rate. Our contribution-only calculator accepts positive deposits and one terminal value, with a unique solution. It does not accept paid-out dividends or withdrawals. An ending balance can already reflect fees and taxes; no separate deductions are automatically added. For prospective fee scenarios, use the fee comparison tool.
Choose the measure that answers your question
Use CAGR for an investment with no intermediate deposits or withdrawals. Use a cash-flow-aware rate for dated investments. Use a projection calculator when the rate is an assumption rather than something you are measuring from past values. Neither CAGR nor XIRR reveals volatility or guarantees a return; a short period can produce a large annualised figure.
Published October 8, 2026. Examples and formulas independently checked. This guide explains return measures and does not recommend an investment.