The average stock market return is over 60 years
Stock market returns vary significantly from year to year. But when stock market performance is averaged over several years or decades at a time – or the average stock market return – a clearer trend begins to emerge.
What is the average stock market return?
The S&P 500 has returned an average of more than 10% annually. This has been true of the benchmark index of US stocks for the past 10 years and several decades.
According to the S&P Dow Jones Indices, the average stock market return as measured by the S&P 500 Index has been about 11% over the past 10 years.
That’s based on rate of return, which measures index members’ capital gains or losses, or price changes. In contrast, total return measures not only changes in price but also cash dividends and earnings from reinvestment. Based on total return, the average stock market return over the last 10 years is about 13%.
Since 1965, the S&P 500 has delivered annualized total returns of 10.2% through 2023, according to compiled data. Berkshire Hathaway (BRKB).
During those 60 years, the S&P 500 rose 37.6 percent (in 1995) in individual years — and fell 37 percent (in 2008).
No individual stock goes up forever, but the lesson here is that the stock market tends to go up over time. Investing in well-chosen stocks can help you grow your money. Your investment may lose money over time, but prudence, discipline and the ability to avoid the ups and downs of the market will reduce the risk of loss.
After accounting for inflation and investment fees and taking out dividends, your actual income may be slightly lower than the stock market’s return in any given year.
What is the Outlook for the S&P 500 in 2025?
Some forecasts see the S&P 500 matching its historical average this year. Analysts at Goldman Sachs Research project that the US benchmark index in 2018 Including dividends, it will generate 10% gross profit by 2025, “the third-straight gain amid strong economic expansion and steady earnings growth.”
The S&P 500 It gains 25% in 2024, after jumping to 26.3% in 2023, including reinvested dividends.
Those spectacular stock market performances were powered in part by the frustration of artificial intelligence. Both of them 2023 and 2024 included several notable endorsements. But investors shrugged off worries about macroeconomic uncertainty and two major global wars — Stocks are gaining momentum after an 18.1% fall in 2022 for the S&P 500.
Best performing stocks of the last 10 years
Here are some of the best-performing stocks in terms of annualized total return over the past 10 years, shown in parentheses. This period includes two major weaknesses and recoveries related to the Covid-19 pandemic and inflation.
Over 3,500 US stocks, in the Vanguard Total Stock Market ETF (tracked)VTI) top performers included. Nivea (NVDA(about 76%) Celsius Holdings (CELH(68%) Applied digital (APLD(61%) eXp World Holdings (Experience(56%) and Zinex (ZYXI(48%)
Other best performing stocks during this period are also included. AMD (AMD(48%) Quantum computing (QUBT(46.4%) Texas-Pacific Land (T.P.L(45.7%) IES Holdings (come out(43%) and Comfort systems (Fix it.(42%)
Many of these are mid-cap or small-cap stocks, which can be small engines of stock market growth. However, US large-cap stocks have, in general, outperformed their mid- and small-cap peers in recent years.
The average stock market return for the mid-cap stocks tracked by the S&P MidCap 400 index over the past 10 years is about 10%, based on annualized total returns. It’s about 9% for small-cap stocks, as tracked by the S&P SmallCap 600 index.
That compares with a 13% annualized total gain over 10 years for the S&P 500, which tracks the largest companies and accounts for 80% of the U.S. market capitalization. Broadly speaking, the stock market’s return is the same as that of the foreign market over the same period.
Note that it is not the best metric for investors to pick stocks. Check out IBD’s time-tested rules for investing in stocks instead.
But past performance can be light, as is the case with Nvidia stock. Quantum computing stock also offers an important lesson: Almost all of its 10-year gains were made in the last quarter of 2024, reaching $17 per share in less than a dollar.
Stock market performance after the election
President-elect Donald Trump’s first year in the White House for a second term is promising for the stock market.
“Since 2005, the best year for market returns has been the first year of a president’s term, and by a wide margin,” Strategas CEO Jason Trainor wrote in December.
Trenert warned: “It’s harder to use historical examples today than in the past where politicians from both political parties easily spend taxpayers’ money.” Still, Trump has vowed to cut government spending to the core. The US president’s promise of tax cuts and deregulation may fuel stocks, but his stance on tariffs and trade remains a concern.
Looking at actual election years, the stock market has gained in 21 out of 25 years (84%) of US presidential elections since 1928.
Why Invest in Stocks?
Owning stocks in a variety of companies offers the potential for rewards that more than offset the risks of losing money. Investing in stocks can help you grow your savings; Protect your money from inflation; And maximize the returns on your investments.
It is said that the stock market rewards patience and punishes greed. Taking the long view can help you enjoy stock market returns — and that’s fantastic over time.
In the year A $100 investment in U.S. stocks in 1928 could be worth nearly $800,000 by the end of 2023, according to data compiled by New Stern School of Business professor Aswat Damodaran. If invested in bets like Treasurys and gold, $100 would be worth around $7,000-$10,000.
Please follow Aparna Narayana on X @IBD_Aparna For more coverage.
You may also like:
Why this IBD tool simplifies the search for top stocks
The best growth stocks to buy and watch
IBD Digital: Access IBD’s premium stock lists, tools and analysis today
Looking for market insights? Check out our IBD Live daily segment
These are the 5 best stocks to buy and watch right now.