Is Xirr good tool for return calculation?

 I asked ChatGPT if xirr is a useful way to calculate an investment yield.

It replies:

Yes, XIRR (Extended Internal Rate of Return) is a useful way to calculate investment returns, particularly in cases where the cash flows associated with the investment are irregular or intermittent. 

XIRR is a financial metric that takes into account the timing and amounts of cash flows, providing a more accurate measure of the investment's performance.

XIRR is commonly used to calculate the annualized rate of return for investments such as mutual funds, stocks, bonds, or other financial instruments where cash flows occur at different points in time. 

It considers both the size and timing of these cash flows, allowing investors to evaluate the profitability of their investments more precisely.

By using XIRR, investors can assess the actual return they have earned on their investments, even when the cash flows are not evenly distributed over time. 

This makes it a valuable tool for comparing investment options with different cash flow patterns or for evaluating investments that involve multiple cash flows, such as real estate or private equity.

It's worth noting that XIRR requires accurate and complete information about the investment's cash flows. 

Additionally, it assumes that the cash flows are reinvested at the same rate as the XIRR itself, which may not be realistic in practice.

Nevertheless, despite these limitations, XIRR remains a widely used and effective method for calculating investment returns, especially when dealing with irregular cash flows.