S&P 500 Historical Returns: What Investors Should Know

The S&P 500 index tracks the 500 largest U.S. publicly traded companies and is widely considered the benchmark for the American stock market. Its historical performance guides most long-term investment assumptions, retirement planning, and financial modeling. Here is what nearly a century of data tells us about stock market returns.

Long-Term Average Returns

According to data compiled by NYU Stern professor Aswath Damodaran, the S&P 500's average annual returns through 2024 are:

10-year average (2015-2024): ~14.7% (total return including dividends)

20-year average (2005-2024): ~11.9%

30-year average (1995-2024): ~10.4%

50-year average (1975-2024): ~12.2%

Nearly 100-year average (1928-2024): ~11.7% (nominal)

After adjusting for inflation (averaging roughly 3% annually), the real return over the past 30 years drops to approximately 7.6% per year. This 7% real return figure is what most financial planners use as the baseline assumption for long-term investment projections.

Returns by Decade

S&P 500 returns have varied dramatically by decade, reflecting different economic conditions:

1960s: ~7.8% annualized (moderate growth, stable economy)

1970s: ~5.9% annualized (stagflation, oil crises, high inflation)

1980s: ~17.5% annualized (disinflation, economic boom, falling interest rates)

1990s: ~18.2% annualized (tech boom, dot-com bubble, globalization)

2000s: ~-0.9% annualized (dot-com crash, financial crisis)

2010s: ~13.6% annualized (post-crisis recovery, bull market)

2020-2024: ~14.5% annualized (despite COVID crash, strong recovery)

The 2000s stand out as the only decade with negative annualized returns, due to two major bear markets: the dot-com bust (2000-2002) and the financial crisis (2007-2009). Investors who entered at the peak in 2000 needed until roughly 2013 to fully recover — a sobering reminder that timeframes matter.

Best and Worst Individual Years

The range of single-year returns is striking:

Best year: +52.56% in 1954

2nd best: +46.74% in 1958

Recent strong years: +26.29% in 2023, +25.02% in 2024

Worst year: -43.84% in 1931

2008 Financial Crisis: -36.55%

2022 Bear Market: -18.01%

In any given year, the S&P 500 has delivered positive returns roughly 73% of the time. The odds of a positive outcome improve dramatically with longer holding periods.

The Power of Dividend Reinvestment

One of the most overlooked aspects of S&P 500 returns is the role of dividends. The total return (price appreciation plus dividends reinvested) is significantly higher than price-only returns over long periods.

Over the past 30 years, the S&P 500 price return has been roughly 8.3% annualized, while the total return with dividends reinvested has been approximately 10.4%. That 2.1% annual difference from dividends compounds massively over time:

$10,000 invested in 1995 (price only): ~$108,000 by 2024

$10,000 invested in 1995 (total return): ~$196,000 by 2024

Reinvesting dividends nearly doubled the ending value. This is why financial advisors consistently recommend enabling dividend reinvestment in your brokerage account.

Every 20-Year Period Has Been Positive

Perhaps the most reassuring statistic for long-term investors: every rolling 20-year period in S&P 500 history has produced positive total returns. Even an investor who bought at the absolute peak before the 1929 crash, the 2000 dot-com bubble, or the 2007 financial crisis would have been positive within 20 years.

The worst 20-year rolling return in S&P 500 history was approximately +6.4% annualized (1929-1948), which still turned $10,000 into roughly $35,000. The best 20-year period (1980-1999) delivered approximately +17.8% annualized, turning $10,000 into over $260,000.

How the S&P 500 Compares to Other Assets

Over the long term, stocks have significantly outperformed other asset classes:

S&P 500: ~10.4% annualized (30 years)

10-Year Treasury Bonds: ~4.5% annualized

Gold: ~7.2% annualized (recent 30 years, with significant variance)

Cash / Money Market: ~2.5% annualized

Inflation (CPI): ~2.7% annualized

After inflation, cash and short-term bonds have barely kept pace, while stocks have delivered meaningful real returns. This is the core argument for stock-heavy portfolios for investors with long time horizons and the ability to tolerate short-term volatility.

What This Means for Your Financial Plan

Most financial planners use a 7% real return (after inflation) or 10% nominal return when projecting long-term growth. These assumptions are well-supported by historical data over 20+ year periods. However, they are averages — actual returns in any given decade can vary significantly.

The key principles from S&P 500 history:

Time is your greatest asset. The longer you stay invested, the more likely you are to capture the market's positive long-term trend.

Do not try to time the market. Missing even the 10 best days in any given decade can cut your returns in half.

Reinvest dividends. They account for roughly 2% of annual returns and compound substantially over decades.

Expect volatility. Drawdowns of 10-20% happen regularly. Bear markets of 30%+ happen roughly once per decade.

Model Your Own Growth Scenario

Understanding how compound interest works with these historical returns is crucial for financial planning. Use our Investment Calculator to project growth at different return rates, or try our Retirement Savings Calculator to see how market returns affect your retirement timeline.