KEY TAKEAWAYS:
- Stock market returns vary by time frame:
- Past 10 years (2014 – 2024): 11.01%
- Past 20 years (2004 – 2024): 8.87%
- Past 30 years (1994 – 2024): 9.33%
- Past 40 years (1984 – 2024): 9.83%.
- S&P 500 historical performance: Since its inception in 1928, the index has averaged an 8.55% annual return. However, it wasn’t until 1957 that the index included 500 stocks. Since then, the average annual return has been 8.00%.
Source: NYU Stern School of Business
The stock market has historically averaged positive returns over the long term, though these results vary significantly depending on the time frame you’re looking at. Over the past 10 years, the average annual return has been 11.01%.
In this article, we’ll break down how the stock market has performed over the decades. We’ll look at long-term trends, review historical returns since 1995, and explain how stock market growth is measured.
How Is Stock Market Growth Measured?
The S&P 500 (Standard & Poor’s 500) Index (also referred to as the S&P 500) is the standard benchmark for measuring stock market performance. It tracks the 500 largest publicly traded US companies, covering about 80% of the total stock market value. That broad scope makes it a potential gauge of overall market trends.
Since its inception in 1928, the S&P 500 index has averaged an annual return of 8.55%.
📌 Also read: When Does The Stock Market Open/Close?
Stock Market Performance From the Past 10, 20, 30, and 40 Years
Over the past 10 years, the stock market has averaged an annual return of 11.01%. Looking further back, the averages are 8.87% over 20 years, 9.33% over 30 years, and 9.83% over 40 years.
The S&P 500 was created in 1928, with an average annual return of 8.55 % since inception. However, the index didn’t expand to 500 stocks until 1957. Since that expansion, its average annual return has been 8.00%.
| Time Period | Average Annual Return (with Dividends Reinvested & Inflation Adjusted) |
|---|---|
| 10 years (2014 – 2024) | 11.01% |
| 20 years (2004 – 2024) | 8.87% |
| 30 years (1994 – 2024) | 9.33% |
| 40 years (1984 – 2024) | 9.83% |
| Since 1957 (when it initially adopted 500 stocks into its index) | 8.00% |
| Since 1928 (when S&P 500 inception) | 8.55% |
📝 Note: These averages are calculated using historical S&P 500 return data published by NYU Stern. We used simple arithmetic average calculations for each time period to provide a general view of long-term performance. These figures are for educational purposes only and should not be considered official or guaranteed.
Year-By-Year Historical Returns
Stock market returns can be volatile and unpredictable from year to year.
For example, in 2008, the S&P 500 index crashed by -36.61%, but it bounced back with a 22.60% gain in 2009. Similarly, after dipping -6.02% in 2018, the market surged 28.28% in 2019, followed by 16.44% in 2020 and 20.02% in 2021.
📝 Note: These figures are calculated by comparing the stock market’s value at the start and end of each calendar year.
Here’s a snapshot of annual S&P 500 returns from 1995 to 2024, including dividends:
| Year | Annual Returns With Dividends |
|---|---|
| 1995 | 33.80% |
| 1996 | 18.74% |
| 1997 | 30.88% |
| 1998 | 26.30% |
| 1999 | 17.72% |
| 2000 | -12.01% |
| 2001 | -13.20% |
| 2002 | -23.78% |
| 2003 | 25.99% |
| 2004 | 7.25% |
| 2005 | 1.37% |
| 2006 | 12.75% |
| 2007 | 1.35% |
| 2008 | -36.61 |
| 2009 | 22.60% |
| 2010 | 13.13% |
| 2011 | -0.84% |
| 2012 | 13.91% |
| 2013 | 30.19% |
| 2014 | 12.67% |
| 2015 | 0.64% |
| 2016 | 9.50% |
| 2017 | 19.09% |
| 2018 | -6.02% |
| 2019 | 28.28% |
| 2020 | 16.44% |
| 2021 | 20.02% |
| 2022 | -23.01% |
| 2023 | 21.97% |
| 2024 | 21.54% |
Source: New York University Stern School of Business, data as of 2024
Adjusting for Inflation and Fees
Stock market returns don’t tell the full story because they don’t often account for inflation, which can reduce returns by 2% to 4% per year. While long-term stock market returns average around ~10% annually (see above), the real return—after adjusting for inflation—can be closer to ~6%.
However, inflation is hard to measure accurately. The Consumer Price Index (CPI) is commonly used to track inflation, but many analysts argue that it understates true inflation rates. This means the real impact of inflation could be higher than what CPI shows.
Fund Expense Ratios Also Matter
Management fees can further impact returns when you’re investing into managed funds like ETFs or mutual funds. The expense ratio (fees for holding an ETF such as the S&P 500) can vary depending on the type of fund and manager. Fund fees can vary a lot, but generally speaking they are charged annually based on the amount of money invested:
✅ Actively managed mutual funds: 0.5% to 2% annually
✅ Passively invested ETFs and index funds: Around 0.1% or lower annually
✅ Low-cost S&P 500 index funds: As low as 0.015% annually
Disclosure: Fees and expense ratios are unique to each fund and can be found in the funds prospectus documents. Numbers provided here are generalizations for educational purposes only, be sure to review a funds prospectus to fully understand the costs before investing.
To wrap things up, choosing low-cost index funds can be a simple way to optimize your returns over time. Small differences in fees may seem insignificant at first, but they can make a big impact in the long run. Keep this in mind as you plan your investment strategy – every percentage point counts.
📌 Also read: Average Expense Ratios for Index Funds, Mutual Funds, and ETFs
References
Disclaimer
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