Average Stock Market Return (2026)

When people say the stock market returns about 10% a year, they mean the S&P 500's long-run average. Damodaran's data puts the compound (geometric) average total return at 9.94% from 1928 to 2024, and Fidelity notes it has averaged about 10% since the index launched in 1957.

The arithmetic average is higher, about 11.8%, because averaging annual percentages overstates the return an investor actually compounds. The compound figure, near 10%, is the one that reflects real growth of money.

Inflation takes a meaningful bite. Adjusted for it, the S&P 500's real return since 1926 is about 7.3%, roughly three percentage points below the nominal figure, because inflation has averaged about 3% a year.

Real returns are the honest measure of purchasing power gained, and they run about three points below nominal across every trailing period (see the table below).

The average hides enormous variation. The 1950s, 1980s, and 1990s each returned roughly 17 to 19% annualized, while the 1930s and 2000s were negative (see the chart and table below).

No two decades look alike, which is why the long-run average only shows up over very long horizons, not within any given decade.

Year to year, the swings are wide. Since 2010 the S&P 500 has ranged from +32% (2013) to -18% (2022), with several years above 25% (see the chart below).

The market has been unusually strong recently: the trailing 10-year return of about 14.8% is well above the long-run 10% average, a gap worth remembering when setting expectations.

The single most useful fact about the average return is how rarely it happens. Only about 5 of the last 96 years produced a return within one percentage point of the arithmetic mean, and just 2 landed within a point of the geometric mean.

The market is far more often extreme than average: 22 years posted gains above 28%, while a handful lost more than a third of their value. 'Average' is a destination reached over decades, not a typical year.

Time is on the investor's side. Of the 97 years from 1928 to 2024, 71 were positive and 26 negative, so stocks finish up about 73% of calendar years.

Up years also tend to be bigger than down years: positive years have averaged about +21% while negative years averaged about -13.5%, which is why the long-run result compounds upward.

The extremes are dramatic. On a total-return basis the best years on record were the mid-1930s and 1954, up around 50%, while the worst was 1931 (down about 44%), followed by 2008 (about -37%) (see the table below).

Exact figures vary by source because some quote price return and others total return, but the ranking of the biggest booms and busts is consistent.

Bull markets do most of the heavy lifting. On average a bull market has delivered a cumulative gain of about 112% over roughly 2.7 years.

Crucially, about 36% of the market's best days occur in the first two months of a new bull market, when sentiment is still fearful, which is why bailing out at the bottom is so costly.

Declines are a feature, not a bug. The average bear market has meant a 35% drop over about 9.6 months, arriving roughly every 3.5 years (see the table below). Even so, stocks rose in about 78% of the last 95 years.

The catch for market-timers: 42% of the S&P 500's strongest single days in the last 20 years happened during a bear market, so selling to avoid the pain also risks missing the sharpest rebounds.

The long horizon is remarkably forgiving. No 20-year rolling period in S&P 500 history has produced a negative total return, even those that included the Depression, the 1970s, and 2008.

Because the best days cluster near market bottoms, staying invested has historically beaten trying to step in and out, one of the most consistently documented findings in all of investing.

Reinvested dividends are a bigger part of returns than most people realize. Hartford Funds finds dividends and their compounding accounted for about 40% of the S&P 500's total return over the last century, and 84% of total return from 1960 to 2021.

This is why 'total return' (with dividends reinvested) is the right number to use; price-only figures understate what long-term investors actually earn.

Over the long run, stocks have beaten everything else. From 1928 to 2024, US large-cap stocks returned about 9.94% a year and small-caps 11.74%, versus 4.5% for bonds, 4.23% for real estate, 5.12% for gold, and 3.31% for cash (see the chart below).

The premium stocks earn over bonds and cash, roughly five to six points a year, is the reward for enduring their far greater short-term volatility.

Small differences in annual return compound into enormous gaps over a lifetime. $100 invested in the S&P 500 in 1928 grew to about $983,000 by the end of 2024, versus roughly $7,200 in Treasury bonds and $2,500 in cash (see the table below).

That is the case for owning stocks for the long haul: the same century of compounding turned identical starting sums into wildly different fortunes.

For long-term planning, about 7% real (or 10% nominal) remains a reasonable base case, but with two caveats. Any single year will look nothing like it, and the range of outcomes is wide.

Many forecasters also expect somewhat lower returns going forward than the recent decade delivered, given elevated valuations, so planning on the long-run average rather than the last ten years is the more prudent choice.