Average Stock Market Returns: Long-Term Data (1926-2024)

Understanding long-term stock market returns is essential for realistic investment planning. This comprehensive analysis examines 98 years of S&P 500 data, showing average returns, volatility, sector performance, and what investors can realistically expect.

The Headline Numbers

S&P 500 Historical Returns (1926-2024)

Average annual return: 10.2% Average real return (after 3% inflation): 7.2%

With dividends reinvested:

• Nominal: 10.2%
• Real: 7.2%

Without dividends:

• Nominal: 6.3%
• Real: 3.3%

The power of dividends: +3.9% annually

$10,000 Invested in 1926

With dividends reinvested:

• 2024 value: $159,000,000
• Real value (inflation-adjusted): $6,540,000

Without dividends:

• 2024 value: $2,850,000
• Real value: $117,000

Dividend reinvestment multiplied returns 55x

By Decade

Average returns by decade:

Decade	S&P 500 Return	Inflation	Real Return
1930s	-0.1%	-2.0%	1.9%
1940s	9.2%	5.9%	3.3%
1950s	19.4%	2.1%	17.3%
1960s	7.8%	2.5%	5.3%
1970s	5.9%	7.1%	-1.2%
1980s	17.5%	5.6%	11.9%
1990s	18.2%	3.0%	15.2%
2000s	-0.9%	2.6%	-3.5%
2010s	13.6%	1.8%	11.8%
2020-24	12.8%	4.7%	8.1%

Best decade: 1950s (19.4%) Worst decade: 2000s (-0.9%)

Key insight: Even worst decade was only -0.9%, and that included two major crashes

Year-by-Year Returns

Best Years (1926-2024)

Year	Return	Context
1933	+53.99%	Recovery from Depression
1954	+52.62%	Post-war boom continues
1935	+47.67%	New Deal policies
1958	+43.36%	Post-recession recovery
1995	+37.58%	Tech boom begins
2013	+32.39%	QE recovery
2019	+31.49%	Strong economy
2021	+28.71%	Pandemic recovery
1997	+33.36%	Tech bubble inflates
1989	+31.69%	Late '80s bull run

Average of top 10 years: +39.3%

Worst Years (1926-2024)

Year	Return	Context
1931	-43.34%	Great Depression depths
1937	-35.03%	Depression relapse
2008	-37.00%	Financial crisis
1974	-26.47%	Oil crisis, stagflation
2002	-22.10%	Dot-com crash continues
1930	-24.90%	Depression begins
1973	-14.66%	Oil embargo starts
2022	-18.11%	Rate hikes, inflation
2001	-11.89%	Dot-com crash
1941	-11.59%	WWII begins for U.S.

Average of worst 10 years: -24.5%

Return Distribution

Frequency of returns (1926-2024):

Return Range	Frequency	Percentage
>30%	12 years	12.2%
20% to 30%	17 years	17.3%
10% to 20%	22 years	22.4%
0% to 10%	20 years	20.4%
-10% to 0%	15 years	15.3%
-20% to -10%	7 years	7.1%
<-20%	5 years	5.1%

Key observations:

• Positive years: 73 (74.5%)
• Negative years: 25 (25.5%)
• Double-digit losses: 12 years (12.2%)
• Odds of positive year: 3 in 4

Rolling Returns Analysis

5-Year Rolling Returns

Range: -12.5% to +28.6%

Distribution:

• Negative 5-year periods: 13 of 94 (13.8%)
• Average 5-year return: 10.7%
• Median: 11.8%

Best 5-year period: 1995-1999 (+28.6% annualized) Worst 5-year period: 2004-2008 (-2.2% annualized)

Probability of loss over 5 years: 13.8%

10-Year Rolling Returns

Range: -1.4% to +19.2%

Distribution:

• Negative 10-year periods: 7 of 89 (7.9%)
• Average 10-year return: 11.3%
• Median: 11.0%

Best 10-year period: 1949-1958 (+19.2% annualized) Worst 10-year period: 1999-2008 (-1.4% annualized)

Probability of loss over 10 years: 7.9%

20-Year Rolling Returns

Range: +5.6% to +17.9%

Distribution:

• Negative 20-year periods: 0 of 79 (0%)
• Average 20-year return: 11.0%
• Median: 10.9%
• Lowest: +5.6% (1929-1948)

Best 20-year period: 1979-1998 (+17.9% annualized) Worst 20-year period: 1929-1948 (+5.6% annualized)

Probability of loss over 20 years: 0%

Key insight: No 20-year period has ever been negative

30-Year Rolling Returns

Range: +8.5% to +13.7%

All positive, all substantial

Average 30-year return: 10.8%

Even worst 30-year period (1929-1958) returned 8.5% annually:

• $10,000 → $113,700
• Real value: $46,700 (adjusted for inflation)

Sector Performance

Long-Term Sector Returns (1990-2024)

Sector	Annual Return	Best Year	Worst Year
Information Technology	11.8%	+67.4% (1999)	-43.1% (2008)
Consumer Discretionary	11.2%	+43.2% (2013)	-38.7% (2008)
Healthcare	10.9%	+37.8% (2013)	-23.4% (2008)
Industrials	10.3%	+41.2% (2003)	-39.8% (2008)
Financials	9.8%	+32.8% (2019)	-56.8% (2008)
Consumer Staples	9.5%	+28.4% (1997)	-14.6% (2022)
Materials	9.2%	+46.8% (2003)	-47.4% (2008)
Energy	7.4%	+52.6% (2021)	-37.3% (2015)
Utilities	8.9%	+32.1% (2000)	-29.8% (2008)
Real Estate	10.1%	+32.3% (2019)	-39.8% (2008)

Best performing: Technology (11.8%) Worst performing: Energy (7.4%)

2008 note: All sectors negative in financial crisis

Sector Rotation Over Time

1990s dominance:

• Technology: +29.1% annually
• Consumer Discretionary: +20.3%
• Financials: +19.8%

2000s struggles:

• Technology: -4.2% (bubble burst)
• Telecom: -10.8%
• Energy: +12.8% (only strong sector)

2010s recovery:

• Technology: +18.9%
• Healthcare: +17.2%
• Consumer Discretionary: +16.7%

2020-2024:

• Technology: +20.1% (AI boom)
• Communication Services: +14.3%
• Energy: +11.8% (recovery from 2020)

No sector dominates forever

Bull Markets vs Bear Markets

Bull Markets (1926-2024)

26 bull markets averaging:

• Duration: 4.5 years
• Cumulative gain: +152%
• Annualized: +22%

Longest bull market:

• March 2009 to February 2020
• Duration: 11 years
• Gain: +401%

Strongest bull market:

• June 1932 to March 1937
• Gain: +324% in 4.9 years

Bear Markets (1926-2024)

26 bear markets averaging:

• Duration: 9.6 months
• Cumulative loss: -35%

Longest bear market:

• March 2000 to October 2002
• Duration: 2.5 years
• Loss: -49%

Worst bear market:

• September 1929 to June 1932
• Duration: 2.8 years
• Loss: -83%

Recent bear markets:

Start	End	Duration	Loss
Oct 2007	Mar 2009	17 months	-57%
Oct 2018	Dec 2018	3 months	-20%
Feb 2020	Mar 2020	1 month	-34%
Jan 2022	Oct 2022	9 months	-25%

Recovery time averages 2 years

Market Crashes and Corrections

Definition

Correction: 10-20% decline Bear market: 20%+ decline Crash: 20%+ decline in short period (weeks/months)

Major Crashes

1929 Great Depression:

• Peak: Sept 1929
• Bottom: June 1932
• Decline: -83%
• Recovery: 25 years to exceed 1929 high

1987 Black Monday:

• Date: October 19, 1987
• One-day drop: -20.5%
• Total decline: -29%
• Recovery: 2 years

2000-2002 Dot-Com Crash:

• Peak: March 2000
• Bottom: October 2002
• Decline: -49%
• Recovery: 5 years
• Tech (NASDAQ): -78%, recovered 2015

2008 Financial Crisis:

• Peak: October 2007
• Bottom: March 2009
• Decline: -57%
• Recovery: 4 years

2020 COVID Crash:

• Peak: February 19, 2020
• Bottom: March 23, 2020
• Decline: -34%
• Duration: 33 days (fastest crash)
• Recovery: 5 months (fastest ever)

Correction Frequency

10%+ corrections:

• Frequency: Every 1.2 years on average
• Median duration: 4 months
• Average decline: -14%

Since 1950:

• Total corrections: 61
• Evolved to bear market: 13 (21%)
• Most corrections don't become bear markets

Stayed <10% decline:

• Only 5 years since 1950
• Market volatility is normal

International Comparison

Developed Markets (1970-2024)

Market	Annual Return	Volatility
U.S. (S&P 500)	10.7%	15.8%
Europe (MSCI Europe)	9.4%	17.2%
Japan (NIKKEI 225)	8.2%	20.1%
UK (FTSE 100)	8.8%	16.4%
Australia (ASX 200)	9.3%	16.9%
Canada (TSX)	9.6%	16.1%

U.S. highest returns with moderate volatility

Emerging Markets (1988-2024)

Market	Annual Return	Volatility
China	11.2%	28.4%
India	12.3%	24.7%
Brazil	10.8%	32.1%
Russia	9.1%	41.2%
South Korea	10.4%	26.8%

Higher returns, much higher volatility

Global Portfolio Returns

100% U.S. stocks (1970-2024): 10.7%

70% U.S. / 30% International: 10.3%

• Lower returns
• Better diversification
• Reduced volatility: 14.9% vs 15.8%

50% U.S. / 50% International: 9.8%

• Even lower returns
• More diversification
• Volatility: 14.6%

Historically, U.S. outperformed international

Returns by Market Cap

Small-Cap vs Large-Cap (1926-2024)

Category	Annual Return	Volatility
Small-cap	11.9%	31.6%
Mid-cap	11.2%	22.8%
Large-cap (S&P 500)	10.2%	18.7%

Small-cap premium: +1.7% annually

$10,000 over 50 years:

• Small-cap: $1,894,000
• Large-cap: $1,173,000
• Difference: $721,000

But:

• 69% more volatility
• More years of underperformance
• Behavioral challenges

Small-cap underperformance periods:

• 1984-1991: 8 years
• 1994-1999: 6 years
• 2013-2021: 9 years

Requires patience

Value vs Growth

Long-term (1926-2024):

Style	Annual Return	Volatility
Large Value	12.4%	20.2%
Large Growth	9.9%	19.8%
Small Value	13.9%	29.1%
Small Growth	9.2%	28.4%

Value premium: +2.5% for large, +4.7% for small

But growth dominated 2010-2020:

• Large Growth: +17.2%
• Large Value: +10.8%
• Difference: +6.4% for growth

2022-2024 reversal:

• Value outperformed as rates rose

No consistent winner, cycles vary

Dividend Returns Component

Dividend Contribution Over Time

1926-1950:

• Total return: 9.1%
• Dividends: 5.2%
• Capital gains: 3.9%
• Dividends = 57% of returns

1951-1975:

• Total return: 11.3%
• Dividends: 4.1%
• Capital gains: 7.2%
• Dividends = 36% of returns

1976-2000:

• Total return: 15.2%
• Dividends: 3.8%
• Capital gains: 11.4%
• Dividends = 25% of returns

2001-2024:

• Total return: 8.4%
• Dividends: 2.1%
• Capital gains: 6.3%
• Dividends = 25% of returns

Dividend yields declining over time:

• 1926-1950: 5.6%
• 1951-1975: 3.9%
• 1976-2000: 2.9%
• 2001-2024: 1.9%

But total returns remain ~10% due to higher capital appreciation

Dividend Growth Rate

Average annual dividend growth (1926-2024): 5.4%

By period:

• 1960s: 4.2%
• 1970s: 7.8% (inflation)
• 1980s: 5.1%
• 1990s: 3.9%
• 2000s: 3.2%
• 2010s: 7.8%
• 2020-24: 5.6%

Dividend aristocrats (25+ year increases):

• Count: 68 companies
• Average yield: 2.4%
• Average growth: 6.2%
• Outperformance: +2.1% vs S&P 500

Real (Inflation-Adjusted) Returns

By Decade (Real Returns)

Decade	Nominal	Inflation	Real
1930s	-0.1%	-2.0%	1.9%
1940s	9.2%	5.9%	3.3%
1950s	19.4%	2.1%	17.3%
1960s	7.8%	2.5%	5.3%
1970s	5.9%	7.1%	-1.2%
1980s	17.5%	5.6%	11.9%
1990s	18.2%	3.0%	15.2%
2000s	-0.9%	2.6%	-3.5%
2010s	13.6%	1.8%	11.8%
2020-24	12.8%	4.7%	8.1%

Only 2 negative real return decades: 1970s and 2000s

Both included major crises:

• 1970s: Oil embargo, stagflation
• 2000s: Dot-com crash + financial crisis

Real Returns Distribution

$10,000 invested (real purchasing power):

Years	5th Percentile	Median	95th Percentile
5	$7,900	$15,200	$22,400
10	$10,100	$24,900	$41,800
20	$16,700	$67,300	$146,200
30	$29,400	$181,300	$512,800

Even 5th percentile (worst outcomes) positive after 10+ years

What Realistic Returns Should You Expect?

Conservative Estimate: 7-8%

Reasoning:

• Historical: 10.2%
• Current valuations high
• Dividend yields low
• Potential headwinds

Factors supporting 7-8%:

• Economic growth: 2-3%
• Dividend yield: 1.5-2%
• Buybacks: 2-3%
• Multiple expansion: 0-1%

$10,000 at 7.5% for 30 years:

• Future value: $87,550
• Real value (3% inflation): $35,900

Moderate Estimate: 9-10%

Reasoning:

• Matches historical average
• Assumes similar economic conditions
• Technology continues growth
• Productivity improvements

$10,000 at 9.5% for 30 years:

• Future value: $153,870
• Real value: $63,100

Optimistic Estimate: 11-12%

Reasoning:

• Technology acceleration
• Global market expansion
• AI productivity boom
• Innovation continues

$10,000 at 11.5% for 30 years:

• Future value: $264,890
• Real value: $108,600

For Planning: Use 7-8%

Why conservative:

• Better to over-save than under-save
• Accounts for volatility
• Provides margin of safety
• Reduces retirement shortfall risk

If market returns 10% but you planned for 7.5%:

• Happy surprise
• More secure retirement
• Can retire earlier

If market returns 7.5% but you planned for 10%:

• Retirement shortfall
• Work longer
• Reduce lifestyle

Portfolio Allocation Impact

100% Stocks (S&P 500)

Historical return: 10.2% Volatility: 18.7% Worst year: -43.3% Best year: +54.0%

Characteristics:

• Maximum growth potential
• High volatility
• Requires strong stomach
• Long time horizon needed (10+ years)

80/20 (Stocks/Bonds)

Historical return: 9.5% Volatility: 15.1% Worst year: -32.8% Best year: +41.5%

Reduction:

• 0.7% lower returns
• 19% less volatility
• Better downside protection

60/40 (Stocks/Bonds)

Historical return: 8.8% Volatility: 11.7% Worst year: -23.9% Best year: +32.3%

Reduction:

• 1.4% lower returns
• 37% less volatility
• Classic balanced portfolio

$10,000 over 30 years:

• 100% stocks: $182,900
• 60/40: $122,300
• Difference: $60,600

But 60/40 has:

• Smoother ride
• Less panic selling
• Better sleep at night

40/60 (Stocks/Bonds)

Historical return: 7.9% Volatility: 8.8% Worst year: -15.6% Best year: +26.1%

Conservative, stable growth

Common Return Expectations vs Reality

Misconception 1: "Stocks Always Go Up"

Reality: 25.5% of years are negative

But over 20 years: 100% positive

Timeframe matters enormously

Misconception 2: "I'll Get 10% Every Year"

Reality: Almost never exactly 10%

Distribution of annual returns:

• Within 2% of 10%: Only 8 years (8%)
• More than 20% gain: 29 years (30%)
• Negative: 25 years (26%)

Volatility is the norm, not exception

Misconception 3: "Past Performance = Future Results"

Reality: Future may differ

Reasons:

• Valuations change
• Economic conditions evolve
• Technology disrupts
• Demographics shift
• Global dynamics different

Use historical data as guide, not guarantee

Misconception 4: "Active Management Beats Market"

Reality: 80-90% underperform over 15 years

S&P 500 index funds beat majority of active funds:

• 1 year: 40% underperform
• 5 years: 70% underperform
• 15 years: 88% underperform

After fees, taxes, and trading costs, index wins

Frequently Asked Questions

What is a realistic annual stock market return?

Historical average is 10.2% (1926-2024). For conservative planning, use 7-8%. Moderate estimate: 9-10%. Over 20+ years, historical average has held consistently within 1-2% of 10%.

Can I expect 10% returns every year?

No. Annual returns vary wildly from -43% to +54%. The 10% is an average over decades. Most individual years return either much more or much less than 10%. Expect volatility.

How often does the stock market lose money?

About 1 in 4 years (25.5% of years). Over 5-year periods: 13.8%. Over 10 years: 7.9%. Over 20 years: 0%. Longer timeframes dramatically reduce loss probability.

Should I reduce my return expectations given current valuations?

Current (2024) Shiller PE is elevated (~30 vs 16 average), suggesting below-average future returns. Many experts predict 5-7% for next decade. But timing markets is difficult. Stay diversified and use conservative assumptions.

What return should I use for retirement planning?

Use 7% for conservative planning. This provides margin of safety. If actual returns are 10%, you'll be better positioned. If returns are 7%, you'll meet goals. Avoid using 10%+ for planning.

Do international stocks have better returns than U.S.?

Historically (1970-2024), U.S. outperformed most developed markets (10.7% vs 9.4% Europe, 8.2% Japan). However, past performance doesn't guarantee future results. Diversification across geographies still recommended.

Are dividend stocks better than growth stocks long-term?

Historically, dividend/value stocks slightly outperformed (12.4% vs 9.9% for large-cap). But growth dominated 2010-2020. Both have roles. Dividends provide income and stability; growth provides capital appreciation. Balanced approach often best.

How much can I withdraw from my portfolio in retirement?

Traditional: 4% rule (withdraw 4% year 1, adjust for inflation). Based on historical data showing 95% success rate over 30 years. Current debate suggests 3-3.5% given lower expected returns and longer retirements.

Conclusion

The S&P 500 has returned 10.2% annually from 1926-2024, with real (inflation-adjusted) returns of 7.2%. While 1 in 4 individual years are negative, no 20-year period has ever lost money. For realistic planning, use 7-8% expected returns to provide margin of safety. Volatility is normal, with corrections every 1.2 years and bear markets roughly every 6 years. Dividend reinvestment contributes 25-57% of total returns depending on period. Long-term investors with diversified portfolios and realistic expectations consistently build wealth through compound growth.

Key planning numbers:

• Conservative: 7-8% nominal, 4-5% real
• Moderate: 9-10% nominal, 6-7% real
• Historical: 10.2% nominal, 7.2% real

Use our calculator to model different return scenarios for your specific investment timeline and goals.

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