What Is the Average Stock Market Return? | The Motley Fool (2024)

The past decade has been great for stocks. From 2012 through 2021, the average stock market return was 14.8% annually for the (SNPINDEX:^GSPC). The returns can -- and do -- vary wildly from one year to the next, and an "average" year almost never actually generates the average return.

Over that decade, only one year, 2014, was close to the 14.8% average annualized return. The catch? Nobody knows which years will be above or below average. This is where the one-year average is helpful only in setting the stage for stocks as good long-terminvestments.

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Returns

Returns are the difference between the initial price of an asset and the dollar value that has been generated after ownership has ended.

Average stock market returns

Average stock market returns

In general, when people say "the stock market," they mean the S&P 500 index. The S&P 500 is a collection -- referred to as a stock market index -- of just over 500 of the largest publicly traded U.S. companies. (The list is updated every quarter with major changes annually.) While there are thousands more stocks trading on U.S. stock exchanges, the S&P 500 comprises about 80% of the entire stock market value on its own, making it a useful proxy for the performance of the stock market as a whole.

The market's results from one year to the next can vary significantly from the average. Let's use the 2012-2021 period as an example:

  • Down 4.4%: 1 year
  • Up 2% or less: 1 year
  • Up more than 20%: 4 years
  • Up between 12% and 19%: 4 years

To put it another way, six of those 10 years resulted in outcomes that were very different from the 14.8% annualized average return over that decade. Of those six very different years, two generated significantly lower returns (with one year, 2018, resulting in losses), while four years delivered substantially higherreturns. Two of those years -- 2013 and 2019 -- generated returns of more than 30%, helping to make up for the years that saw below-average returns.

10-year, 30-year, and 50-year average stock market returns

10-year, 30-year, and 50-year average stock market returns

Let's take a look at the stock market's average annualized returns over the past 10, 30, and 50 years, using the S&P 500 as our proxy for the market.

Data source: MoneyChimp.
PeriodAnnualized Return (Nominal)Annualized Real Return (Adjusted for Inflation)$1 Becomes... (Nominal)$1 Becomes... (Adjusted for Inflation)
10 years (2012-2021)14.8%12.4%$3.79$3.06
30 years (1992-2021)9.9%7.3%$11.43$5.65
50 years (1972-2021)9.4%5.4%$46.69$6.88

It's worth highlighting the variance in annual returns from one year to the next versus the average. Since 1972, here is a breakdown of the yearly results:

  • Returns of 20% or more: 19 years
  • Returns between 10% and 20%: 13 years
  • Returns between 0% and 10%: nine years
  • Losses between 0% and 10%: four years
  • Losses between 10% and 20%: two years
  • Losses of more than 20%: three years

Stock market returns vs. inflation

Stock market returns vs. inflation

In addition to showing the average returns, the table above also shows useful information on stock returns adjusted for inflation. For example, $1 invested in 1972 would be worth $46.69 today.

But, in spending power, $46 isn't worth what it would have been in 1972. Adjusting for inflation, that $46 will buy the same amount of goods or services you would have been able to buy with $6.88 in 1972.

Related investing topics

What Is a Good Return on Investment?You invest to get a return. So what makes a good ROI?
How to Calculate Holding Period ReturnTotal return gained or lost in a time period helps investors measure return.
How Many Shares Should I Buy of a Stock?So you've found a company to invest in. How many shares should you buy?

Buy-and-hold investing

Buy-and-hold investing

If there's any one lesson we can take from the breakdown of annual results versus the average, it's that investors are far more likely to earn the best returns by investing for the long term. There's simply no reliably accurate way to predict which years will be the good years and which years will underperform or even lead to losses.

But we do know that, historically, the stock market has gone up more years than it has gone down. The S&P 500 gained value in 40 of the past 50 years, generating an average annualized return of 9.4%. Despite that, only a handful of years actually came within a few percentage points of the actual average. Far more years significantly either underperformed or outperformed the average than were close to the average.

What's a person to do? Buy high-quality stocks, ideally regularly across every market condition, and hold those investments for many years. The evidence is overwhelming that investors who try to trade their way to higher returns with short-term moves or buy and sell based on projections of short-term peaks and bottoms generally earn below-average returns. Moreover, those strategies require substantially more time and effort. They can also result in higher fees and taxes that further reduce gains.

If you're looking to build wealth, investing in stocks is an excellent place to start. But to get the best returns in stock investing, use the method that's tried and true: Buy great stocks and hold them for as long as possible.

Mike Price has no position in any of the stocks mentioned. The Motley Fool has no position in any of the stocks mentioned. The Motley Fool has a disclosure policy.

What Is the Average Stock Market Return? | The Motley Fool (2024)

FAQs

What Is the Average Stock Market Return? | The Motley Fool? ›

The stock market has returned an average of 10% per year over the past 50 years. The past decade has been great for stocks. From 2012 through 2021, the average stock market return was 14.8% annually for the S&P 500 index (SNPINDEX:^GSPC).

What is a realistic 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 about purchasing power with the inflation calculator.

Is Motley Fool stock advisor worth it? ›

Motley Fool Stock Advisor can be a good service for investors wanting stock recommendations, reports, and educational resources. The advisor service has an average stock pick return of 628% and has quadrupled the S&P 500 over the last 21 years, according to Motley Fool's website.

What is the average return of the stock market in 2024? ›

Analysts project 11.5% earnings growth and 5.5% revenue growth for S&P 500 companies in 2024.

What is the Motley Fool stock advisor 5 year return? ›

Motley Fool Stock Advisor Performance

139% for the S&P 500. Past 10 years: Average return of 292% vs. 186% for the S&P 500. Past 5 years: Average return of 79% vs.

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.

Is 10% return on investment realistic? ›

Usually the implication is that they can expect, over a long time, a 10% return. Fortunately some ask, with some doubt, "Is a 10% return really reasonable?" It is not. While the average growth or return in the market (e.g., the S&P 500) is about 10%*, investors over time do not see that.

What are Motley Fool's double down stocks? ›

"Double down buy alerts" from The Motley Fool signal strong confidence in a stock, urging investors to increase their holdings.

What is the best stock picking service? ›

Let's jump in!
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Mar 18, 2024

What is Motley Fool's all in Buy Alert stock? ›

We regularly see similar ads from the Motley Fool about “all in” buy alerts, sometimes also called “double down” or “five star” buys, and they're generally just the type of steady teaser pitch that they can send out all year, over and over with no updates, to recruit subscribers for their flagship Motley Fool Stock ...

Will market bounce back in 2024? ›

Earnings Rebound

Analysts are projecting S&P 500 earnings growth will accelerate to 9.7% in the second quarter and S&P 500 companies will report an impressive 10.8% earnings growth for the full calendar year in 2024.

Will the stock market recover in 2024? ›

While there could be a growth slowdown in the first half of 2024, experts believe growth should resume in the second half of the year. Americans faced many financial challenges this year, from persistent inflation to increasingly expensive debt.

What is the expected return of the stock market in the next 10 years? ›

Highlights: 5.2% 10-year expected nominal return for U.S. large-cap equities; 9.9% for European equities; 9.1% for emerging-markets equities; 5.0% for U.S. aggregate bonds (as of September 2023). All return assumptions are nominal (non-inflation-adjusted).

What are Motley Fool's top 10 stocks? ›

The Motley Fool has positions in and recommends Alphabet, Amazon, Chewy, Fiverr International, Fortinet, Nvidia, PayPal, Salesforce, and Uber Technologies. The Motley Fool recommends the following options: short March 2024 $67.50 calls on PayPal. The Motley Fool has a disclosure policy.

What is Motley Fool's ultimate portfolio? ›

The Ultimate Portfolio is a carefully curated model portfolio created by Motley Fool's expert analysts. Its purpose is to offer a strategic roadmap that can lead to long-term investment success.

What is the average return on investment with a financial advisor? ›

Estimates on the return on investment from having a financial advisor vary. In a 2019 whitepaper, Vanguard assessed an “Advisor's Alpha,” or the value that a financial advisor adds to a client's portfolio, to be about a 3% net return per year, depending on a client's circ*mstances and investments.

What is ideal return from stock market? ›

That depends on your risk appetite, and the ability to hold on to stocks during the difficult market conditions. But historically, a return of 12-15% per annum compounded over the long term is considered very good, as this will grow exponentially as time goes by.

What is the average 10 year return on the stock market? ›

Stock Market Average Yearly Return for the Last 10 Years

The historical average yearly return of the S&P 500 is 12.58% over the last 10 years, as of the end of April 2024. This assumes dividends are reinvested. Adjusted for inflation, the 10-year average stock market return (including dividends) is 9.52%.

Is 20% return on a stock good? ›

A 20% return is possible, but it's a pretty significant return, so you either need to take risks on volatile investments or spend more time invested in safer investments.

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

Average Market Return for the Last 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).

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