Average Historical Stock Market Returns for S&P 500 (5-year up to 150-year averages) - Trade That Swing (2023)

The US stock market has a long history of producing double-digit yearly returns. The average yearly return is 10.356% over the last 100 years. Here you’ll find statistics on the average stock market performance over the last 5, 10, 20, 30, 50, 100, and 150 years. As well as insights on when these average returns are useful, when they aren’t, tips for maximizing returns, problems the statistics hide, the biggest up and down years in stocks, and high-return alternative investments to stocks.

This article is updated every couple of months.

Here’s the video summary version of the article:

Things to Consider with Long-Term Stock Market Returns

Many people look at average stock returns and they expect that is what they should make each year. That may be the case, but it also may not. Here are some things to consider.

• These returns are based on the S&P 500 (or other indices discussed). If your only investment is S&P 500 ETFs then you will get similar results to those discussed below. If you have other holdings in your portfolio, your results will be different.
• For most S&P 500 ETFs the yearly expense ratio charged by the fund is minimal, but it will still reduce your return, and that difference will compound over time.
• The returns discussed below are based on holding the index or a similar basket of stocks for the prescribed time period. “Trading” in and out of these positions will result in different returns.
• Reinvesting the dividends has a big impact on performance, as shown in the data below. To get the highest return when stock index investing, reinvest the dividends. Preferably do this through a DRIP or some other program where the dividends are automatically reinvested for you at no charge. This will save the commission costs and the time of having to do it yourself.
• If you aren’t passively invested in index funds, then the long-term average return of the stock indices is not of much use to you, except for comparing your own results to it.
• If you are actively trading and making less than the average historical stock return, then you are better off investing in stock index funds and saving yourself time and effort.
• If your portfolio allocation is different than 100% stock index ETFs, your returns will likely be lower. Gold and bonds have long-term returns that are lower than stocks. If part of your portfolio is allocated to these (and there’s nothing wrong with that), your overall portfolio returns will likely be lower.
  
• Inflation is the silent killer of cash and low-return investments. The S&P 500 has handily beat inflation over time. If you keep large amounts of money in a savings account, that money’s buying power is being widdled away by inflation at about 2-3% or more per year. More in 2022.

While the long-term average return of the US stock market is roughly 10% per year (based on the S%P 500 index), most people’s average return is less than half of that! A study by JPMorgan found that investors averaged a return of 2.9% per year, while bond and stock returns were much higher over the time frame studied.

Why does this happen? Because most investors buy and sell too much without knowing what they are doing. They buy and sell at the wrong time, but think they’re doing the smart thing.

If you want market average returns, buy-and-hold stock index ETFs.

If you want to beat market average returns, then study how to do that. Don’t actively trade until you have done this. Most short-term traders lose money until they have dedicated significant time, practice, and research to mastering when to buy and sell.

Everyone should passively invest some funds. Set it and forget it for 10 years or more. The Passive Stock Investing Using ETFs eBook lays out the approach that has been compounding people’s wealth for the last 150 years. It shows what to buy, and how to do it.

The 150-Year History Yearly Average Return of S&P 500

The historical average yearly return of the S&P 500 is 9.064% over the last 150 years, as of end of January 2023. This assumes dividends are reinvested.

Adjusted for inflation, the 150-year average return (including dividends) is 6.805%.

US Stock Market 150-Year Average Return

The S&P 500 hasn’t been around for 150 years. The S&P 500 started in 1957. Prior to this, it was the S&P 90 which was introduced in 1928. Prior to this, other data sources, such as the Cowles Commissions, are used. Robert Shiller, the author of Irrational Exuberance, compiled the data sources which extend back to 1871, and DQYJD further streamlined that data.

All averages are based on monthly average prices, not a specific day. For example, December 2001 to December 2021 for the 20-year average. Since it is a monthly average, you could also think of the time frame as roughly mid-December to mid-December (12 months) as opposed to January 1 to December 31 (12 months).

The 100-Year History Yearly Average Return of S&P 500

The historical average yearly return of the S&P 500 is 10.345% over the last 100 years, as of end of January 2023. This assumes dividends are reinvested. Dividends account for about 40% of the total gain over this period.

Adjusted for inflation, the 100-year average return (including dividends) is 7.214%.

US Stock Market 100-Year Average Return

The 50-Year History Yearly Average Return of S&P 500

The historical average yearly return of the S&P 500 is 10.283% over the last 50 years, as of end of January 2023. This assumes dividends are reinvested.

Adjusted for inflation, the 50-year average return (including dividends) is 6.068%.

The big difference between the annualized return and the inflation-adjusted return here has a lot to do with the high inflation of the 1970s through the early 80s.

US Stock Market 50-Year Average Return

The 30-Year History Yearly Average Return of S&P 500

The historical average yearly return of the S&P 500 is 9.687% over the last 30 years, as of the end of January 2023. This assumes dividends are reinvested.

Adjusted for inflation, the 30-year average return (including dividends) is 7.015%.

US Stock Market 30-Year Average Return

The 20-Year History Yearly Average Return of S&P 500

The historical average yearly return of the S&P 500 is 9.775% over the last 20 years, as of the end of January 2023. This assumes dividends are reinvested.

Adjusted for inflation, the 20-year average return (including dividends) is 7.077%.

US Stock Market 20-Year Average Return

The 10-Year History Yearly Average Return of S&P 500

The historical average yearly return of the S&P 500 is 12.353% over the last 10 years, as of end of January 2023. This assumes dividends are reinvested.

Adjusted for inflation, the 10-year average return (including dividends) is 9.462%.

US Stock Market 10-Year Average Return

The 5-Year History Yearly Average Return of S&P 500

The historical average yearly return of the S&P 500 is 8.996% over the last 5 years, as of the end of January 2023. This assumes dividends are reinvested. Remember, these figures use monthly averages which make the figures more relevant regardless of the exact day invested.

Adjusted for inflation, the 5-year average return (including dividends) is 4.992%.

US Stock Market 5-Year Average Return

The Stock Market Doesn’t Always Trend

These statistics can make it seem like the stock market just marches higher almost every year. But that is not how stocks always act. They actually tend to move sideways quite a bit of the time. Most of the progress in the stock market over the last 150 has come in three big moves: mid-40s to mid-60s, 80s-90s, 2010 to 2021. The stock market has been dropping in 2022. It may end the current Major Bull Market, or it may not.

As the chart below shows, it is also possible to move sideways, with little growth, sometimes for decades. During such times, dividends of a few percent per year would be the only return.

Live SPX Chart on TradingView

Depending on when someone starts investing, there is a bit of luck in terms of how the market will perform after that. If someone started investing around 2000, they wouldn’t have seen much profit until 2013. At that point, a big uptrend was underway.

If you started investing in the last 60s, it was dividend income with little to no gains until the 80s.

As you can see from the chart, there have been multiple 10+ year stretches where it wasn’t great to be a buy-and-hold investor.

Averages can sometimes be deceiving. And a 10% average return doesn’t mean you make 10% each year. Some years you are making 20% or 30%. In other years, you watch your account drop, and in other years all you get are dividends with no gains.

Yet despite all that chop, the long-term average is still 10%.

What are the biggest up and down years in the S&P 500?

Going back to 1928, which is before the S&P 500 existed (it was the S&P 90 from 1928 to 1957), the biggest up year was 46.59% in 1933, and the biggest down year was -47.07% in 1931. Stats according to MacroTrends.

1931: -47.07%
1937: -38.59%
1974: -29.72%
2002: -23.37% (the Nasdaq Composite stock index fell more than 30% in 2002)
2008: -38.49%

1954: +45.02%
1958: +38.06%
1975: +31.55%
1995: +34.11%
1997: +31.01%

Here you can see all the up and down years. There are more up years than down years, but there are still lots of down years that investors have to live through.

How to Beat the Market Average Returns

There are a number of way to beat and hold. There is of course day trading or swing trading, but those take up more time.

If you are an investor and want to limit your screen time, Steve Burns lays out a “once a month” strategy that beats buy and hold and doesn’t require giving up much time. Unfortunately, even this strategy hasn’t faired as well in the last several years.

Here are the rules:

• If long, continue to HOLD the S&P 500 ETF if on the last day of the month it will close ABOVE its 200-day moving average.
• If long, SELL the S&P 500 ETF if on the last day of the month it will close BELOW its 200-day moving average.
• If in cash (no position), BUY the S&P 500 ETF if on the last of the month it will close ABOVE its 200-day moving average.
• If in cash (no position), stay in cash if on the last of the month if the S&P 500 ETF is going to close BELOW its 200-day moving average.

The full details of the strategy are available at NewTraderU.

Another strategy is to use the Coppock Curve on a monthly chart.

• Sell the S&P 500 if the Coppock Curve closes below 0.
  
• Buy again when it closes above 0.

Here is how the strategy worked since 1993 on the SPDR S&P 500 ETF (SPY)

I need to do more research on whether the Coppock Curve can beat buy-and-hold returns over longer periods of time.

Everyone should passively invest some funds. Set it and forget it for 10 years or more to compound your wealth.
The Passive Stock Investing Using ETFs eBook lays out how to do it.

FAQs

Should I trade or invest?

Do both! If you want to trade, allocate some money to a short-term trading account where you can swing trade or day trade. Swing trading or day trading has the potential to produce higher returns than investing because capital can be compounded more often and large drawdowns can be avoided (with a good strategy). Yet passively investing is also a good idea. Allocate some funds to buying stock index funds. It takes little if any work, and this approach has averaged returns of greater than 10% per year over the long term.
Note: most short-term traders fail (read why here).

Does the stock market always go up?

Over the long term, the stock market has gone up. Yet, in any given year, or even for many years, it may not. Average stock market returns are based on investing for the long term. In any given year the major stock indexes could fall, move sideways, or rise.

What are some high-return alternatives to investing in stocks?

There are a number of alternative investments that yield 10% or more per year.

These include:

• Comics: 17%
• Art: 15%
• Trading cards: 12%
• Lego: 11%
• Farmland: 11%
• Collectible wine: 11%
• High-end purses/handbags: 8% to 10%
• Real estate (residential, industrial): 10%
• Crypto: 113% (swings wildly)

Gold has not fared as well. Since 1975 the annualized yearly return is 5.6%. Adjusted for inflation, that is a little over 1.6% per year. Silver is less than 5% since 1970, and has about a 1% yearly return factoring for inflation.

Government bonds are a staple in many investment portfolios. Since 1926, these bonds have averaged returns between 5% and 6% per year. High-quality corporate bonds tend to pay 0.5% to 1% per year higher than this.

Trades that last a few weeks to a few months more your style? MyComplete Method Stock Swing Trading Courseguides you through a complete method for swing trading stocks.

By Cory Mitchell, CMT

Disclaimer: Nothing in this article is personal investment advice, or advice to buy or sell anything. Trading is risky and can result in substantial losses, even more than deposited if using leverage.

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