What Is the Average Stock Market Return? - NerdWallet (2024)

MORE LIKE THISInvestingStocks

What is the average stock market return?

The average stock market return is about 10% per year, as measured by the S&P 500 index, but that 10% average rate is reduced by inflation. Investors can expect to lose purchasing power of 2% to 3% every year due to inflation.

» Learn more about purchasing power with NerdWallet's inflation calculator.

The stock market is geared toward long-term investments — money you don't need for at least five years. For shorter time frames, you'll want to stick to lower-risk options — such as an online savings account — and you'd expect to earn a lower return in exchange for that safety.

» Check out our roundup of the best online brokerages for stock trading

Advertisement

Charles Schwab
Interactive Brokers IBKR Lite
J.P. Morgan Self-Directed Investing

NerdWallet rating

4.9/5

NerdWallet rating

5.0/5

NerdWallet rating

4.1/5

Fees

$0

per online equity trade

Fees

$0

per trade

Fees

$0

per trade

Account minimum

$0

Account minimum

$0

Account minimum

$0

Promotion

None

no promotion available at this time

Promotion

None

no promotion available at this time

Promotion

Get up to $700

when you open and fund a J.P. Morgan Self-Directed Investing account with qualifying new money.

Learn More
Learn More
Learn More

The average stock market return isn't always average

While 10% might be the average, the returns in any given year are far from average. In fact, between 1926 and 2022, returns were in that “average” band of 8% to 12% only seven times. The rest of the time they were much lower or, usually, much higher. Volatility is the state of play in the stock market.

But even when the market is volatile, returns tend to be positive in a given year. Of course, it doesn’t rise every year, but over time the market has gone up in about 70% of years.

» Intrigued? Learn how to invest in stocks

Key terms

Key term

Definition

Return

The profit or loss on an investment since its purchase. If you bought a stock for $10 and it's worth $11 now, that's a 10% return.

Index

A group of stocks whose performance is used as a measuring stick for the whole stock market, like the S&P 500 or Dow Jones Industrial Average.

Market cycle

The repeating pattern of the stock market — alternating between bull markets (upward trends) and bear markets (downward trends).

Portfolio

The group of investments you own, like stocks, bonds and funds.

5-year, 10-year, 20-year and 30-year S&P 500 returns

Below is a table showing the S&P 500's price returns over different timeframes, as of the end of 2022.

The table shows that while the market has a long-term average annual return of 10%, year-to-year returns can vary significantly. The five-year return factors in the post-pandemic surge and the 2023 recovery. The 20-year return includes the Great Recession, and the 30-year return includes the dot-com crash of the early 2000s.

» Want some practice first? Try paper trading

Period (start-of-year to end-of-2023)

Average annual S&P 500 return

5 years (2019-2023)

15.36%

10 years (2014-2023)

11.02%

15 years (2009-2023)

12.63%

20 years (2004-2023)

9.00%

25 years (1999-2023)

7.18%

30 years (1994-2023)

9.67%

Stock data is from macrotrends.net and is intended solely for informational purposes, not for trading purposes.

What to expect the stock market to return

There are no guarantees in the market, but this 10% average has held remarkably steady for a long time.

So what kind of return can investors reasonably expect today from the stock market?

The answer to that depends a lot on what’s happened in the recent past. But here’s a simple rule of thumb: The higher the recent returns, the lower the future returns, and vice versa. Generally speaking, if you're estimating how much your stock-market investment will return over time, we suggest using an average annual return of 6% and understanding that you'll experience down years as well as up years. You can use NerdWallet's investment calculator to see what 6% growth looks like based on how much you're planning to invest.

Here are three key takeaways if you’re looking to make money in the stock market.

1. Temper your enthusiasm during good times. Congratulations, you’re making money. However, when stocks are running high, remember that the future is likely to be less good than the past. It seems investors have to relearn this lesson during every bull market cycle.

2. Become more optimistic when things look bad. A down market should cause you to celebrate: You can buy stocks at attractive valuations and anticipate higher future returns.

3. You get the average return only if you buy and hold. If you trade in and out of the market frequently, you can expect to earn less, sometimes much less. Commissions and taxes eat up your returns, while poorly timed trades erode your bankroll. Study after study shows that it’s almost impossible for even the professionals to beat the market. It's good to rebalance your portfolio occasionally. That means selling off a little bit of the investments that have gained more than expected, and buying a little bit of the ones that have underperformed in order to bring the portfolio back to its target composition. But other than a little bit of rebalancing, try to touch your investments as little as possible.

Over time even a few percentage points can make the difference between retiring with a tidy nest egg and continuing to drudge away in your golden years.

» Start small: How to invest $500

Markets, demystified

Register with NerdWallet or sign in to read our monthly stock market outlook, and keep up with the terminology, news and events investors should know about.

Read it here

What Is the Average Stock Market Return? - NerdWallet (4)

Ready to get started?

If the market’s long-term return sounds attractive to you, it’s easy to get started. You’ll first need to open a brokerage account, which allows you to buy and sell stock market investments. If you're not sure where to open your account, see our list of the best online brokers.

» Need a little help? Learn how to open a brokerage account.

What Is the Average Stock Market Return? - NerdWallet (2024)

FAQs

What Is the Average Stock Market Return? - NerdWallet? ›

A good return on investment is generally considered to be around 7% per year, based on the average historic return of the S&P 500 index, adjusted for inflation. The average return of the U.S. stock market is around 10% per year, adjusted for inflation, dating back to the late 1920s.

What is the average stock market return over 30 years? ›

Average Stock Market Returns Per Year
Years Averaged (as of end of February 2024)Stock Market Average Return per Year (Dividends Reinvested)Average Return with Dividends Reinvested & Inflation Adjusted
30 Years10.222%7.495%
20 Years9.74%6.96%
10 Years12.681%9.555%
5 Years14.543%9.879%
3 more rows
Mar 28, 2024

What is a good rate of return in the stock market? ›

A good return on investment is generally considered to be around 7% per year, based on the average historic return of the S&P 500 index, adjusted for inflation. The average return of the U.S. stock market is around 10% per year, adjusted for inflation, dating back to the late 1920s.

What is the 10 year return of the sp500? ›

Average returns
PeriodAverage annualised returnTotal return
Last year30.7%30.7%
Last 5 years15.9%109.5%
Last 10 years15.7%331.4%
Last 20 years10.8%682.2%

How much was $10,000 invested in the S&P 500 in 2000? ›

Think About This: $10,000 invested in the S&P 500 at the beginning of 2000 would have grown to $32,527 over 20 years — an average return of 6.07% per year.

What is the safest investment with the highest return? ›

Here are the best low-risk investments in April 2024:
  • High-yield savings accounts.
  • Money market funds.
  • Short-term certificates of deposit.
  • Series I savings bonds.
  • Treasury bills, notes, bonds and TIPS.
  • Corporate bonds.
  • Dividend-paying stocks.
  • Preferred stocks.
Apr 1, 2024

What is the average annual return if someone invested 100% in stocks? ›

The average stock market return is about 10% per year, as measured by the S&P 500 index, but that 10% average rate is reduced by inflation.

Is 7% return on investment realistic? ›

General ROI: A positive ROI is generally considered good, with a normal ROI of 5-7% often seen as a reasonable expectation. However, a strong general ROI is something greater than 10%. Return on Stocks: On average, a ROI of 7% after inflation is often considered good, based on the historical returns of the market.

How much money do I need to invest to make $1000 a month? ›

A stock portfolio focused on dividends can generate $1,000 per month or more in perpetual passive income, Mircea Iosif wrote on Medium. “For example, at a 4% dividend yield, you would need a portfolio worth $300,000.

How much money do I need to invest to make $3 000 a month? ›

Imagine you wish to amass $3000 monthly from your investments, amounting to $36,000 annually. If you park your funds in a savings account offering a 2% annual interest rate, you'd need to inject roughly $1.8 million into the account.

How long to double money at 7 percent? ›

What Is the Rule of 72?
Annual Rate of ReturnYears to Double
7%10.3
8%9
9%8
10%7.2
6 more rows
Feb 14, 2024

What is the average return of the stock market in the last 20 years? ›

The S&P 500 returned 345% over the last two decades, compounding at 7.7% annually. But with dividends reinvested, the S&P 500 delivered a total return of 546% over the same period, compounding at 9.8% annually. Investors can get direct, inexpensive exposure to the index with a fund like the Vanguard S&P 500 ETF.

What is a good return on investment over 5 years? ›

The average annual return for the S&P 500, when adjusted for inflation, over the past five, 10 and 20 years is usually somewhere between 7.0% and 10.5%. This means that if your portfolio is returning better than 10.5%, you have a good ROI.

How much to invest to get $1 million in 10 years? ›

In order to hit your goal of $1 million in 10 years, SmartAsset's savings calculator estimates that you would need to save around $7,900 per month. This is if you're just putting your money into a high-yield savings account with an average annual percentage yield (APY) of 1.10%.

What if I invested $1000 in S&P 500 10 years ago? ›

According to our calculations, a $1000 investment made in February 2014 would be worth $5,971.20, or a gain of 497.12%, as of February 5, 2024, and this return excludes dividends but includes price increases. Compare this to the S&P 500's rally of 178.17% and gold's return of 55.50% over the same time frame.

How much will I have if I invest $500 a month for 10 years? ›

What happens when you invest $500 a month
Rate of return10 years30 years
4%$72,000$336,500
6%$79,000$474,300
8%$86,900$679,700
10%$95,600$987,000
Nov 15, 2023

What is the average return on stocks over 40 years? ›

Stock Market Historical Returns

40 Years (1982 – 2022): 11.6% annual return. 30 Years (1992 – 2022): 9.64% annual return. 20 Years (2002 – 2022): 8.14% annual return.

What is the average return of the stock market over 20 years? ›

The S&P 500 returned 345% over the last two decades, compounding at 7.7% annually. But with dividends reinvested, the S&P 500 delivered a total return of 546% over the same period, compounding at 9.8% annually. Investors can get direct, inexpensive exposure to the index with a fund like the Vanguard S&P 500 ETF.

What is the average stock market return over 60 years? ›

Stock market returns between 1960 and 2023

This is a return on investment of 47,073.47%, or 10.15% per year.

What was the average return of the spy in the last 30 years? ›

In the last 30 Years, the SPDR S&P 500 (SPY) ETF obtained a 10.54% compound annual return, with a 15.10% standard deviation. Discover new asset allocations in USD and EUR, in addition to the lazy portfolios on the website.

Top Articles
Latest Posts
Recommended Articles
Article information

Author: Dean Jakubowski Ret

Last Updated:

Views: 5605

Rating: 5 / 5 (70 voted)

Reviews: 93% of readers found this page helpful

Author information

Name: Dean Jakubowski Ret

Birthday: 1996-05-10

Address: Apt. 425 4346 Santiago Islands, Shariside, AK 38830-1874

Phone: +96313309894162

Job: Legacy Sales Designer

Hobby: Baseball, Wood carving, Candle making, Jigsaw puzzles, Lacemaking, Parkour, Drawing

Introduction: My name is Dean Jakubowski Ret, I am a enthusiastic, friendly, homely, handsome, zealous, brainy, elegant person who loves writing and wants to share my knowledge and understanding with you.