What Is the Average Stock Market Return? (2024)

By Rebecca Lake ·August 24, 2023 · 13 minute read

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What Is the Average Stock Market Return? (1)

Table of Contents

  • 5, 10, 20, 30-yr Average US Stock Market Return What Is a Stock Market Return?
  • What Is a Stock Market Return?
  • Factors that Impact the Stock Market
  • Measuring Growth in the Stock Market
  • What Is a Good Annual Return on Stocks?
  • Future Stock Market Growth Predictions

The average stock market return of the S&P 500 is about 10% annually — and 6% to 7% when adjusted for inflation. Of course, there have been years with much higher returns and years with much lower returns. Over the past 25 years, from 1998 to 2022, the market peaked at 32% (at the end of 2013) and bottomed at -37% (at the end of 2008).

For context, it’s rare that the average stock market return is precisely 10% in any given year. When looking at nearly 100 years of data, as of the end of July 26 2023, the yearly average stock market return was between 8% and 12% only eight times. In reality, stock market returns are typically much higher or much lower.

Key Points

• The average stock market return is 10% annually in the U.S., while the actual return may vary widely from year to year and is closer to 6-7% when adjusted for inflation.

• The average stock market return for the last 5 years was 11.33% (7.28% when adjusted for inflation), for the last 10 years it was 12.39% (9.48% when adjusted for inflation), for the last 20 years it was 9.75% (7.03% when adjusted for inflation), and for the last 30 years it was 9.90% (7.22% when adjusted for inflation).

• Factors that can impact the stock market include interest rates, employment rates, inflation, supply chain disruptions, consumer debt levels, national elections, and more.

• The S&P 500 index includes the 500 largest publicly traded companies and represents around 80% of the U.S. stock market, making it a good indicator of how the market is doing overall.

• Investors looking for above-average stock market returns may choose to take a more aggressive approach, looking at actively managed funds or momentum trading, for example.

5-year, 10-year, 20-year, 30-year Average US Stock Market Return

There is a silver lining to this constant stock market drama. If someone loses big in the stock market, there’s a chance they’ll gain their money back over time — with time in the market giving many investors an upside over timing the market.

That’s because many people typically don’t invest in the stock market for just one year. Instead, they invest for the long term in the hopes that the investments they buy today will be worth more years from now when they decide to sell. With that in mind, it may be helpful to look at the S&P 500 average return over the last 5, 10, 20, and 30 years to understand stock price movement.

By looking at shorter and gradually longer time periods, it’s interesting to see how different events have impacted market returns over the last three decades.

PeriodAverage stock market returnAverage stock market return adjusted for inflation
5 years (2018 to 2023)11.33%7.28%
10 years (2013 to 2023)12.39%9.48%
20 years (2003 to 2023)9.75%7.03%
30 years (1993 to 2023)9.90%7.22%

Source: https://www.macrotrends.net/2526/sp-500-historical-annual-returns

💡 Quick Tip: Before opening an investment account, know your investment objectives, time horizon, and risk tolerance. These fundamentals will help keep your strategy on track and with the aim of meeting your goals.

Average Market Return for the Last 5 Years

According to the S&P annual returns from 2018 to mid-2023, the S&P 500 average return for the last five years was 11.33% (7.28% when adjusted for inflation). That’s above the average stock market return of 10%. It’s possible this figure may have been even higher if stocks’ performance overall had not been marked by pandemic-related volatility early in 2020, and a bear market and high inflation in 2022.

Average Market Return for the Last 10 Years

Looking at the S&P 500 from 2013 to mid-2023, the average S&P 500 return for the last 10 years is 12.39% (9.48% when adjusted for inflation), which is also higher than the annual average return of 10%.

The stock market had its ups and downs over the decade, but the only years that experienced losses were 2015, 2018, 2022, with losses of 0.73%, 6.24%, and 19.44% respectively.

Average Market Return for the Last 20 Years

Looking at the S&P 500 from 2003 to mid-2023 the picture changes. The average stock market return for the last 20 years was 9.75% (7.03% when adjusted for inflation), which is lower than the average 10% return.

That makes sense given that the United States experienced some major lows and notable highs from 2000 to 2009.

In early 2000, the market was doing exceptionally well, but from late 2000 to 2002, the dot-com bust contributed to losses for three consecutive years. That period wasn’t helped by the aftermath of 9/11 in 2001.

Then in 2008 the financial crisis led to huge losses. And in 2022, due to high interest and fears of a recession, the market dropped sharply. Looking at these factors, it isn’t a huge surprise that the 20-year average stock market return is lower than the annual average.

Average Market Return for the Last 30 Years

When we add another decade to the mix, the average return inches closer to the annual average of 10%. Looking at the S&P 500 for the years 1993 to mid-2023, the average stock market return for the last 30 years is 9.90% (7.22% when adjusted for inflation).

Some of this success can be attributed to the dot-com boom in the late 1990s (before the bust), which resulted in high return rates for five consecutive years.

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What Is a Stock Market Return?

A stock market return refers to the profit, stock dividend, or both that an investor receives on their investment. To understand stock market returns, it helps to know why the stock market fluctuates.

Factors that Impact the Stock Market

It’s important to remember that some factors will influence the performance of individual companies more than others, or impact certain sectors more than others. All this can play into the so-called average returns of the stock market.

For example, if supply chains are disrupted, as they were during the global Covid pandemic, that can have an impact on manufacturing of various products; demand for those products; the price of consumer goods and commodities; and so on.

Higher employment rates or lower employment rates can also impact markets, as can inflation, interest rates, fears of recession, consumer debt levels, construction, and more.

Because the world is increasingly interconnected, markets that were once considered separate from the U.S. are now far more interdependent. The conflict in Ukraine has had far-reaching implications for Europe, the Middle East, as well as the U.S. and other regions.

As multiple companies’ share prices fluctuate simultaneously, the stock market as a whole can swing up or down. If a trade war or regional conflict or global pandemic affects companies’ production overseas, or consumers’ ability to spend domestically, numerous big businesses’ shares could drop, and the public could become uncertain about the U.S. economy.

As a result, the market could dip. When tariffs on imports and exports ease, some stocks can rise — as traders anticipate reduced costs passed on to consumers and to businesses.

All this volatility affects stock market returns. When people wonder what their return will be, they’re asking how much they will have gained (or lost) in a year, or 10, 20, or 30 years. While everyone invests in different stocks and funds, a simple way to estimate how much you might gain — in order to make longer-term financial plans — is by looking at the average stock market return.

Measuring Growth in the Stock Market

How do people measure stock market returns? By looking at indexes. An index is a group of stocks that represents a section of the stock market, and there are roughly 5,000 indexes representing U.S. stocks. Investors may be familiar with the three most popular market indexes: The Dow Jones Industrial Average, Nasdaq Composite, and S&P 500.

When people refer to the stock market and the average stock market return, they’re likely referring to the S&P 500.

The represents the 500 largest publicly traded companies, such as Microsoft, Apple, Amazon, Meta, and Alphabet. It stands for around 80% of the U.S. stock market, so the performance of this particular index is considered a good indicator of how the market is doing overall.

💡 Quick Tip: When you’re actively investing in stocks, it’s important to ask what types of fees you might have to pay. For example, brokers may charge a flat fee for trading stocks, or require some commission for every trade. Taking the time to manage investment costs can be beneficial over the long term.

What Is a Good Annual Return on Stocks?

When discussing the average rate of return on stocks and what you can expect, it’s important to be realistic. As mentioned, the stock market average return tends to hover around 10%, though when you factor in inflation, stock market returns tend to be closer to 6%.

Using the 6% figure as a baseline, an investor might choose to construct a portfolio that’s designed to produce that level of returns. If you’re invested in funds that track the S&P 500, then you’re more likely to realize stock market returns that fall within the average or typical range. Anything above 6% might be considered icing on the cake.

If an investor is looking for above-average stock market returns, they might choose to take a more aggressive approach to building a portfolio, by looking at actively managed funds or momentum trading, for example, to try to capitalize on higher return potential. But those strategies can entail greater risk — and as always, there’s no guarantee that an investor will beat the market. Plus, active trading may mean paying higher expense ratios or commissions, which can eat into investment gains.

Using a buy-and-hold strategy and staying invested when the market moves up or down may help an investor realize consistent returns over time. With dollar-cost averaging, for instance, one would continue adding money to the market regardless of how high or low stock prices go. In doing so, they’d be able to ride the waves of the market as stock market returns increase or decrease, though they may not beat the market this way.

Taking this attitude can help an investor avoid falling into the trap of panic-selling when market volatility sets in. This is important because getting out of the market — or into it — at the wrong time could significantly impact a portfolio’s overall return profile.

Why the S&P 500 Average Return Is Rarely ‘Average’

The annual average of 10% is not a reliable indicator of stock market returns for a specific year because outliers can skew the annual average. When the return is much higher or much lower than usual in certain years, those years are known as outliers.

For example, the average stock market return for the last 20 years may seem a little low at 9.75%, especially when compared to the return for the last 10 years, which was 12.39%. And it’s not that there were so many bad years from 2002 to mid-2023. In fact, in 2003, the average return was 26.38%, and it was 23.45% in 2009.

But there were negative outliers that affected the 20-year average.

Dot-Com Bubble

Returns from 2000 to 2009 are perfect examples of outliers in the stock market. The late 1990s were the years of the dot-com bubble, when technology and website-based companies became hugely popular with investors. But in 2000, companies like Cisco and Dell placed huge “sell” orders on their stocks, and investors started panic-selling their shares.

This period is often referred to as the dot-com bust, and the market experienced annual losses for three years. In 2000, the average annual loss was 10.14%; in 2001, returns dropped by 13.04%; in 2002, they plummeted by 23.37%.

Financial Crisis of 2008

Another example of an outlier is the financial crisis of 2008. For years, banks had given unconventional loans to people with low income and bad credit so they could buy houses. As more people bought homes, housing prices increased drastically. People could no longer afford their homes, which put lenders in a tough spot.

The Fed proposed a bank bailout bill, but Congress denied the bill in September of that year, resulting in a market crash. Congress passed the bill in October, but it couldn’t immediately undo the damage on the stock market. In 2008, the market fell by a whopping 38.49%.

Market Recovery

The dot-com bust and the financial crisis of 2008 are two prime examples of outliers that have caused stock returns to drop more than usual. But in years following these negative outliers, the stock market soared.

Panic from the dot-com bust and other tensions finally started to calm down in late 2003, and the market return was 26.38% for the year. Annual average returns continued to trend upward for four more years, until the crisis of 2008.

After the market crashed in 2008, it bounced back with a return of 23.45% in 2009 and continued to rise for six years. The first loss was in 2015, and that was only a dip of 0.73%.

Steep drops are often followed by sharp gains — and by consecutive annual gains, even if they aren’t huge. People who panicked and sold their stocks in 2008 once share prices started to drop likely lost a lot of money. But those who held onto their positions probably increased their earnings by 2012, when market returns had finally increased enough to offset how much the market lost in 2008.

When the stock market experiences a negative outlier, it can be helpful to consider keeping the long game in mind.

Future Stock Market Growth Predictions

As we can see from the outliers during the dot-com bust and financial crisis, when the stock market performs poorly, it tends to eventually bounce back. Similarly, if the stock market does exceptionally well, the market will eventually slow down and experience a loss. This can help with evening out the average return on stocks for investors.

The widely accepted rule is that if an investor’s rate of return is low now, they can expect it to be high in the future; if their rate of return is high now, they can expect it to be low in the future. Historically, the market balances out and experiences positive growth overall. Stock market returns increase around 70% of the time.

When share prices peak, then drop by 10% or more, that’s known as a stock market correction. If the market is doing swimmingly, investors can bet the market will correct itself by dipping.

All investments have risk, so there’s no way to guarantee a certain stock market return at all, let alone in a specific time frame. Numerous factors affect stocks’ performance, so it can be difficult to accurately predict how a stock will perform. And anyone who tells investors they can time the stock market to maximize returns is dead wrong.

The Takeaway

While the average stock market return is 10% annually in the U.S., that number has some caveats attached.

Realistically, that figure is more like 6% to 7% when accounting for inflation. Plus, very few years see a stock market return of 10% — that number reflects an average, rather than a norm. Most years the market has higher or lower average returns.

It’s important to remember that “average” isn’t always average. If you’re invested in a certain sector or certain companies, those returns would likely be different than the stock market overall. Market returns often depend on broader economic conditions that affect investor sentiment, as well as the performance of individual companies.

Once you have a sense of how the market performs, you may feel more comfortable making your own investment choices.

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You may also be interested in:

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What Is the Average Stock Market Return? (2024)


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.

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 the average stock market return over 50 years? ›

The index has returned a historic annualized average return of around 10.26% since its 1957 inception through the end of 2023.

What is a good rate of return for stocks? ›

A good return on investment is generally considered to be about 7% per year, based on the average historic return of the S&P 500 index, and adjusting for inflation.

What is the 20 year return of the S&P 500? ›

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.

How much will stocks grow in 10 years? ›

5-year, 10-year, 20-year and 30-year S&P 500 returns
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%
2 more rows
Mar 5, 2024

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 much should a 70 year old have in the stock market? ›

If you're 70, you should keep 30% of your portfolio in stocks. However, with Americans living longer and longer, many financial planners are now recommending that the rule should be closer to 110 or 120 minus your age.

How much should a 50 year old have in stocks? ›

Stock Values By Age 50

Here's the breakdown of what your financial portfolio should look like by age 50, according to Empower. Investors in their 50s and 60s keep between 35% and 39% of their portfolio assets in U.S. stocks and about 8% in international stocks.

Is 50 too late to invest in stocks? ›

It's never too late.

Use any knowledge of the tax system you already have and apply it to your investing journey – it will benefit you.

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.

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

How much money do day traders with $10,000 accounts make per day on average? ›

With a $10,000 account, a good day might bring in a five percent gain, which is $500. However, day traders also need to consider fixed costs such as commissions charged by brokers. These commissions can eat into profits, and day traders need to earn enough to overcome these fees [2].

Does money double every 7 years? ›

How the Rule of 72 Works. For example, the Rule of 72 states that $1 invested at an annual fixed interest rate of 10% would take 7.2 years ((72/10) = 7.2) to grow to $2. In reality, a 10% investment will take 7.3 years to double (1.107.3 = 2).

What is a good average annual return? ›

Most investors would view an average annual rate of return of 10% or more as a good ROI for long-term investments in the stock market. However, keep in mind that this is an average.

What is the best performing stock in the last 10 years? ›

1. Nvidia (NVDA) Nvidia is one of the best performing stocks of all-time and has richly rewarded shareholders over the past decade. Nvidia initially rose to prominence for its chips used for video-game graphics, but its business has boomed recently thanks to the rise of artificial intelligence.

What is a good rate of return over 30 years? ›

Looking at the S&P 500 for the years 1993 to mid-2023, the average stock market return for the last 30 years is 9.90% (7.22% when adjusted for inflation).

What is the 40 year return on the stock market? ›

Stock Market Historical Returns

Here's a sample breakdown of stock market returns over time, assuming you invested $100 at the beginning of the time period listed: 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 on real estate last 30 years? ›

Returns. As mentioned above, stocks generally perform better than real estate, with the S&P 500 providing an 8% return over the last 30 years compared with a 5.4% return in the housing market. Still, real estate investors could see additional rental income and tax benefits, which push their earnings higher.

What is the average return of the Nasdaq for 30 years? ›

The Nasdaq has an average annualized return of 10.4% for the past 30 years. On the other hand, the S&P 500 – an index that tracks 500 leading companies listed on U.S. stock exchanges – gained a cumulative 875% over the last 30 years.

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