Investment Performance Calculator
This calculator shows you how your portfolio is doing.
Just give it your investment's beginning and ending balance for a given time period, and any additions and withdrawals (including dividends not kept in the account) along the way.
How Does it Work?
This calculator can only give you an estimate
(total accuracy would require you to give the date and amount of each addition and withdrawal)
but it's a respected estimate, using a formula recommended by
The Four Pillars of Investing and
The Motley Fool,
and widely used by many others.
Let's take a couple of examples to see how the method works.
Example 1:
First, assume your account grows from $1000 to $1200 in one year, and that you don't make any additions or withdrawals during that time.
That means your investments created $200 of wealth, which is 20% of the $1000 it had to work with 
so the return rate must be twenty percent.
Example 2:
Now for a more complicated example.
Again assume that your starting balance was $1000 and your ending balance was $1200,
but that you made a $50 addition at some point during the year.
This time, your investments only created $150 of new wealth.
To turn that dollar figure into a percent, you have to decide "a percent of what?" 
that is, how much money did the account have to work on during the year?
Well, it had the initial $1000 for the whole year, and the $50 addition for some unknown portion of the year,
so we'll use the estimate that it had the equivalent of $1025 for the whole year (that is, the whole thousand, plus half of the fifty).
Now the growth rate is ($150 growth) / ($1025 estimated average principal) = 0.1463 or 14.63 percent.
See below (or one of the two links above) for a formula that you can write down or use in a spreadsheet.
(You may have to do a little painful thinking to convince yourself that the formula really does come out of the logic described here.)
Investment Return Formula
The estimate used in Example 2 is that
$1025 grew by $150
Equivalently (but more confusingly!)
$1025 grew to $1175
or
( B_{start} + N / 2 ) grew to ( B_{end}  N / 2 )
where B_{start} and B_{end} are the starting and ending balances, and N is the net additions minus withdrawals.
Plugging these values into the return rate formula gives:
r = [ ( B_{end}  N / 2 ) / ( B_{start} + N / 2 ) ] ^{1/Y}  1
where Y is the elapsed time, in years.
. . .
BUG FIX: The last formula shown was wrong before 9/26/2014.
(The calculator was correct.)
Apologies for the confusion.
