{
  "id": 13886566,
  "title": "How IRR reveals the real impact of investment timing",
  "url": "https://urgent.news/2026/10/12/how-irr-reveals-the-real-impact-of-investment-timing",
  "topic": "finance",
  "section": "Finance & Markets",
  "published": "2026-10-12T01:00:00.000Z",
  "source": {
    "name": "The Economic Times",
    "slug": "the-economic-times",
    "url": "https://economictimes.indiatimes.com/wealth/invest/beyond-cagr-how-irr-reveals-the-real-impact-of-investment-timing/articleshow/134847404.cms"
  },
  "original_language": "en",
  "account": "The internal rate of return (IRR) is a crucial metric for understanding the true impact of investment timing, particularly for those who make multiple investments or withdrawals over time. Unlike the compound annual growth rate (CAGR), which is suitable for a single investment and final value, IRR accommodates various cash flows of different sizes and timings.\n\nTwo primary performance concepts help distinguish IRR from CAGR: time-weighted returns (TWR) and money-weighted returns (MWR). TWR evaluates performance independently of investment or withdrawal timing, focusing on the underlying portfolio's growth. Conversely, MWR assesses the actual return an individual investor achieved, considering both the size and timing of their cash flows.\n\nTo illustrate, consider Investor X, who invests Rs.1 lakh in 2021 and sells the units at the end of 2025. The CAGR for this scenario is 2.53%. However, if the investment were split into two instalments, the timing of cash flows becomes crucial. Investor Y and Z both invest Rs.1 lakh but at different intervals. Investor Y waits until 2023 to invest the larger sum, while Investor Z invests both instalments earlier. Due to the differing timing of their investments, the two investors experience different returns. Investor Z's MWR is notably higher (7.5%) compared to Investor Y's (2.17%) and the fund's TWR (2.53%), demonstrating how IRR accounts for the impact of investment timing.",
  "summary": null,
  "key_points": [],
  "editors_take": null,
  "illustration": null,
  "coverage": {
    "outlets": 1,
    "also_reported_by": []
  },
  "ai_generated": true,
  "disclaimer": "Summaries, key points and the editor’s take are written by software from other outlets’ reporting and may contain errors — always check the linked original."
}