Common XIRR Mistakes in Excel (And How to Fix Them)

Excel's XIRR function is powerful but unforgiving. One small mistake and you'll either get an error or—worse—a completely wrong answer you won't notice.

Here are the most common mistakes and their fixes:

Mistake #1: Wrong Sign Convention

❌ The Problem

All your cash flows have the same sign (all positive or all negative).

Result: #NUM! error

✅ The Fix

Use this convention consistently:

• Money OUT (investments) = Negative (-)
• Money IN (redemptions, current value) = Positive (+)

Correct Example:

15-Jan-2022	-50000	← Invested
15-Jun-2022	-30000	← Invested more
15-Jan-2024	+95000	← Current value

Mistake #2: Dates as Text Instead of Actual Dates

❌ The Problem

Your dates look correct but are stored as text strings.

Result: #VALUE! error or wrong answer

✅ How to Check

Click on a date cell. If it's a real date, the formula bar shows a number like 45307.

Fix: Use =DATEVALUE("15-Jan-2022") to convert text to date, or enter dates using =DATE(2022,1,15).

💡 Pro Tip

If you copy-paste dates from your broker's PDF or website, they often come as text. Always verify!

Mistake #3: Missing the Final Value

❌ The Problem

You only included buy and sell transactions, but forgot to add the current portfolio value as the last cash flow.

Result: XIRR only measures closed trades, ignoring unrealized gains

✅ The Fix

Add a final row:

• Date: Today's date
• Amount: Current portfolio value (positive)

This represents "what you would get if you sold everything today."

Mistake #4: Dates Not Sorted Chronologically

❌ The Problem

Your dates are jumbled up.

Result: Excel may throw #NUM! or calculate based on first date only

✅ The Fix

While XIRR technically doesn't require sorted data, the first cash flow MUST have the earliest date. Sort your data oldest-to-newest to be safe.

Mistake #5: Mixing Different Investments

❌ The Problem

You combined cash flows from multiple unrelated investments into one XIRR calculation.

Result: A blended average that doesn't represent any single investment accurately

✅ The Fix

Calculate XIRR separately for each:

• Each stock
• Each mutual fund
• Or, for portfolio-level XIRR, include ALL investments together with a combined final value

Mistake #6: Not Providing a Guess Value

❌ The Problem

XIRR returns #NUM! even when your data looks correct.

✅ The Fix

XIRR uses iterative calculation. Sometimes it needs a starting "guess":

=XIRR(values, dates, 0.1)

The third parameter (0.1 = 10%) gives Excel a starting point. Try values from -0.5 to 0.5 if you get errors.

Mistake #7: Dividend Handling

❌ The Problem

You excluded dividend payouts from your cash flow list.

Result: XIRR understates your true returns

✅ The Fix

Include dividends as positive cash flows on the date they were credited:

15-Mar-2023

+2500

← Dividend received

Quick Checklist Before Calculating XIRR

☐ Investments are negative, returns are positive
☐ All dates are real Excel dates, not text
☐ Final value is included with today's date
☐ Data is sorted with earliest date first
☐ Dividends and other payouts are included
☐ If you get #NUM!, try adding a guess parameter

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