Average stock market returns:
The stock market’s average annual return is 12.74% over the past 10 years, 8.14% over the past 20 years, 9.64% over the past 30 years, and 11.6% over the past 40 years. The S&P 500 was created in 1928, and the average return since then is 9.82%. However, it wasn’t until 1957 that there were 500 stocks adopted into the index. Since 1957, the average annual return is 9.82%.
What is the average stock market return?
The average stock market return over the past 10 years is around 12.74%. In this article, we’ll look through the historical annual returns dating back to 1995, as well as performance over the past 10, 20, 30, and 40 years. We’ll also look at how the stock market has performed since its inception, and how performance is measured in general.
How is stock market growth measured?
The average return for the stock market is measured using the Standard & Poor’s 500 Index (also referred to as the S&P 500), which is a stock market index of the 500 largest publicly traded US companies. The S&P 500 index accounts for about 80% of the stock market value, which makes it a useful benchmark to track the performance of the overall stock market. Since its inception in 1928, the S&P 500 index has returned an average of 9.82% per year.
Also read: When Does The Stock Market Open/Close?
Year by year historical returns
As you can see by the yearly annual returns below, the stock market can seem volatile and unpredictable from year to year. For example, the stock market fell -36.55% in the market crash of 2008, but went on to gain 25.94% in 2009, then 14.82% in 2010. The stock market dipped by -4.23% in 2018, but went on to gain 31.21% the next year, 18.02% the year after that, and 28.47% the year after that.
Note that these figures are calculated based on data from the first of the year compared with the last day of the year.
Here, we’ll look at the historical annual returns of the S&P 500 by year. And in the next section, we’ll calculate the average return over the past 10, 20, 30, and 40 years.
| Year | Annual Returns With Dividends |
|---|---|
| 1995 | 37.20% |
| 1996 | 22.68% |
| 1997 | 33.10% |
| 1998 | 28.34% |
| 1999 | 20.89% |
| 2000 | -9.03% |
| 2001 | -11.85% |
| 2002 | -21.97% |
| 2003 | 28.36% |
| 2004 | 10.74% |
| 2005 | 4.83% |
| 2006 | 15.61% |
| 2007 | 5.48% |
| 2008 | -36.55 |
| 2009 | 25.94% |
| 2010 | 14.82% |
| 2011 | 2.10% |
| 2012 | 15.89% |
| 2013 | 32.15% |
| 2014 | 13.52% |
| 2015 | 1.38% |
| 2016 | 11.77% |
| 2017 | 21.61% |
| 2018 | -4.23% |
| 2019 | 31.21% |
| 2020 | 18.02% |
| 2021 | 28.47% |
| 2022 | -18.01% |
Stock market performance from the past 10, 20, 30, and 40 years
The stock market’s average annual return is 12.74% over the past 10 years, 8.14% over the past 20 years, 9.64% over the past 30 years, and 11.6% over the past 40 years. The S&P 500 was created in 1928, and the average return since then is 9.82%. However, it wasn’t until 1957 that there were 500 stocks adopted into the index. Since 1957, the average annual return is 9.82%.
| Time period | Average annual return |
|---|---|
| 10 years (2012 – 2022) | 12.74% |
| 20 years (2002 – 2022) | 8.14% |
| 30 years (1992 – 2022) | 9.64% |
| 40 years (1982 – 2022) | 11.6% |
| Since 1957 (when it initially adopted 500 stocks into its index) | 10.15% |
| Since 1928 (when S&P 500 inception) | 9.82% |
Adjusting for inflation and fees
The returns from investing in the stock market are not true returns since it doesn’t account for inflation, which would minus about 2% to 4% off of your average return numbers. While it’s safe to say that the stock market will give you returns of about 10% per year if investing for the long-term, it’s closer to 6% when adjusted for inflation. However, inflation is tricky to accurately track since the data comes from the Consumer Price Index (CPI), which many analysts believe to understate the true inflation rates.
Additionally, a high expense ratio (fees for holding the S&P 500) may also reduce your average annual returns. The average expense ratio for actively managed mutual funds can range from 0.5% to 2% while passively invested ETFs and index funds tend to be around 0.1% or lower. If investing directly into a S&P 500 index fund, expense ratios can be as low as 0.015% for the lowest cost index funds.
Also read: Average Expense Ratios for Index Funds, Mutual Funds, and ETFs
