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

FAQs

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

The average stock market return is about 10% per year for nearly the last century, as measured by the S&P 500 index. In some years, the market returns more than that, and in other years it returns less.

Average Stock Market Return for the S&P 500

Fortunately, you can use data from Nobel Prize-winning economist Robert Shiller to approximate the S&P 500. Using Shiller's data, since 1971 the S&P 500 has delivered an annualized return of 7.58%—or 10.51% with dividends reinvested.

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.

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.

Expectations for return from the stock market

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. Some years will deliver lower returns -- perhaps even negative returns.

Stock Market Average Yearly Return for the Last 30 Years

The average yearly return of the S&P 500 is 10.47% over the last 30 years, as of the end of April 2024. This assumes dividends are reinvested. Adjusted for inflation, the 30-year average stock market return (including dividends) is 7.74%.

Over the past decade, you would have done even better, as the S&P 500 posted an average annual return of a whopping 12.68%. Here's how much your account balance would be now if you were invested over the past 10 years: $1,000 would grow to $3,300. $5,000 would grow to $16,498.

Answer and Explanation: The amount of $100,000 will grow to $432,194.24 after 30 years at a 5% annual return. The amount of $100,000 will grow to $1,006,265.69 after 30 years at an 8% annual return.

Average Rate of Return: This is more difficult to calculate because by their nature private equity firms and hedge don't always report their losses and earnings. However, most estimates suggest that you can expect average returns of up to 14%.

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.

• 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.

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.

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.

This rule is a general guideline for investors to use when considering their asset allocation. It suggests that investors may expect an average annual return of around 10% from stocks, 5% from bonds, and 3% from cash over the long term.

The S&P 500 average return over the past decade has come in at around 12.39%, beating the long-term historic average of 10.7% since the benchmark index was introduced 65 years ago. But the stock market return you'll see today could be very different from the average stock market return over the past 10 years.