The long-run average annual return of the U.S. stock market is approximately 10% per year in nominal terms, or roughly 6.5 to 7% after inflation. That figure has remained remarkably stable across more than a century of data and serves as the most widely cited benchmark in financial planning, investment research, and academic finance. But the single number obscures a great deal of variation that matters in practice: which index you measure, how long you hold, which decade you lived through, what you are comparing stocks against, and how often the market falls sharply before recovering.
This report compiles the most current and comprehensive available data on average stock market returns across five dimensions: by index, by time horizon, by decade, relative to other asset classes, and in the context of volatility and drawdowns. Each section is designed to be citable as a standalone source on a specific data question. All figures are total return (price appreciation plus dividends reinvested) unless noted otherwise.
| ~10% / yr | Long-run average annual S&P 500 nominal return (1928-2025). Inflation-adjusted: approximately 6.5-7%. Source: Damodaran/NYU Stern; S&P Dow Jones Indices. |
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Average Annual Return by Index
The four major U.S. equity benchmarks differ meaningfully in composition, weighting methodology, and long-run return. The S&P 500, which represents approximately 80% of total U.S. market capitalization across 500 large-cap companies, is the most widely used reference. The Dow Jones Industrial Average covers 30 blue-chip companies and is the oldest continuously tracked index. The Nasdaq 100 concentrates on the 100 largest non-financial companies listed on the Nasdaq exchange, with a heavy technology weighting that has driven both its higher long-run return and its greater volatility. The Russell 2000 represents small-cap U.S. equities and has historically lagged large caps over longer holding periods despite periods of outperformance.
Average Annual Return by Index (Total Return, Dividends Reinvested)
| Index | Long-Run Avg Annual Return | Long-Run Period | 2024 Return | 2025 Return | 2026 YTD (thru June 4) |
|---|---|---|---|---|---|
| S&P 500 | ~10.2% | 1928-2025 | +25.0% | +17.9% | +11.4% |
| Dow Jones Industrial Average | ~9.5-10.3%* | 1896-2025 | +15.0% | +15.0%* | +5.1%* |
| Nasdaq 100 | ~13.8% | 1985-2025 | +28.0%* | +24.9%* | N/A |
| Russell 2000 | ~7.5-8.5% | 1984-2025 | +11.5%* | +8.1%* | N/A |
* Approximate figures from composite sources. Dow YTD is price return only. Nasdaq and Russell 2000 recent figures are approximate. S&P 500 data from Slickcharts/S&P Dow Jones Indices; long-run Nasdaq 100 from Trade That Swing; Russell 2000 from Trade That Swing; Dow long-run from DQYDJ.
Nominal vs. Inflation-Adjusted (Real) Return, S&P 500
The Federal Reserve and BLS data show average annual CPI inflation of approximately 3.0% since 1928. Inflation-adjusted (real) returns are approximately 3 percentage points lower than nominal returns across all time horizons.
| Time Period | Nominal Avg Annual Return | Avg Annual Inflation | Real (Inflation-Adjusted) Return |
|---|---|---|---|
| Long-run (1928-2025) | ~10.2% | ~3.0% | ~6.9% |
| Last 30 years (1995-2025) | ~9.8% | ~2.6% | ~7.1% |
| Last 20 years (2005-2024) | ~8.4% | ~2.7% | ~5.7% |
| Last 10 years (2015-2024) | ~11.3% | ~3.2% | ~8.0% |
| Last 5 years (2020-2024) | ~13.6% | ~4.5% | ~8.9% |
S&P 500 Year-by-Year Total Return, 2020-2026
| Year | S&P 500 Total Return | Context |
|---|---|---|
| 2020 | +18.4% | COVID-19 crash and rapid recovery; CARES Act stimulus |
| 2021 | +28.7% | Post-pandemic reopening; strong earnings growth |
| 2022 | -18.1% | Federal Reserve rate hike cycle; worst year since 2008 |
| 2023 | +26.3% | AI-driven tech rally; soft landing narrative builds |
| 2024 | +25.0% | Strong earnings; AI spending acceleration; election year |
| 2025 | +17.9% | Continued bull run; tariff volatility in Q1; recovery |
| 2026 YTD | +11.4% | Through June 4, 2026. Not a full-year figure. |
Returns by Time Horizon
The most practically important insight from long-run equity data is that return outcomes narrow dramatically as the holding period extends. Over one-year periods, the S&P 500 has returned anywhere from roughly -62% to +139% in a single year (both extremes in the early 1930s). Over 30-year periods, the worst annualized outcome in recorded history was +7.8% per year, still a total gain of over 850%. No 20-year rolling period in S&P 500 history has produced a negative total return.
Annualized S&P 500 Return by Holding Period
| Holding Period | Annualized Avg Return | Worst Period Return | Best Period Return | % of Periods Positive |
|---|---|---|---|---|
| 1 year | ~10.2% | ~-62% (1931) | ~+139% (1933) | ~73% |
| 5 years | ~10.0% | ~-17% annlzd | ~+30% annlzd | ~87% |
| 10 years | ~10.0% | ~-3% annlzd (2009) | ~+21% annlzd (2000) | ~94% |
| 20 years | ~10.1% | ~+3.1% annlzd | ~+17.7% annlzd (1999) | 100% |
| 30 years | ~10.2% | ~+7.8% annlzd (1929 start) | ~+14.8% annlzd (1938 start) | 100% |
Dividends Reinvested vs. Price-Only Return, S&P 500
Reinvested dividends account for approximately 40% of total long-run S&P 500 returns. The current dividend yield of approximately 1.3% is lower than the historical average of 3-4%, meaning the dividend contribution to future total returns is smaller than it was in earlier decades.
| Time Period | Price-Only Return (annlzd) | Total Return Incl. Dividends (annlzd) | Dividend Contribution |
|---|---|---|---|
| Long-run (1928-2025) | ~6.0% | ~10.2% | ~4.2 percentage points |
| Last 30 years (1995-2025) | ~7.4% | ~9.8% | ~2.4 percentage points |
| Last 10 years (2015-2024) | ~9.9% | ~11.3% | ~1.4 percentage points |
What this data means in practice for retirement planning: the difference between a 10-year and a 30-year investment horizon is not incremental. It is the difference between outcomes that have historically ranged from negative to strongly positive over 10 years, and outcomes that have never been negative over 30 years. The time horizon question is one of the most important a financial advisor works through with clients approaching retirement.
Returns by Decade
Decade-level data from the Damodaran/NYU Stern dataset shows that while long-run averages are consistent, individual decades vary enormously. The 1930s and 2000s produced the only negative average annual returns in the dataset since the 1920s. Four of the past five decades (1980s through 2020s to date) have delivered above-average double-digit returns. The 2020s decade so far has been among the strongest on record despite significant volatility in 2022.
S&P 500 Average Annual Return by Decade
| Decade | Avg Annual Nominal Return | Avg Annual Real Return | Notable Events |
|---|---|---|---|
| 1920s (1928-1929) | ~19% | ~17% | Pre-crash bull market; Great Crash 1929 |
| 1930s | ~-0.1% | ~2% | Great Depression; massive volatility |
| 1940s | ~9.2% | ~3.5% | WWII and postwar expansion; high inflation |
| 1950s | ~19.5% | ~16.5% | Postwar prosperity; Korea War |
| 1960s | ~7.8% | ~4.3% | Vietnam; rising inflation late decade |
| 1970s | ~5.9% | ~-1.4% | Stagflation; oil shocks; high inflation |
| 1980s | ~17.5% | ~12.6% | Disinflation; Reagan bull market |
| 1990s | ~18.2% | ~14.9% | Tech boom; longest expansion to that point |
| 2000s | ~-0.95% | ~-3.4% | Dot-com crash; 9/11; GFC; 'lost decade' |
| 2010s | ~13.6% | ~11.5% | Post-GFC recovery; QE era; tech leadership |
| 2020s (2020-2025) | ~17.5% | ~11.5% | COVID; inflation surge; AI rally |
Frequency of Positive vs. Negative Years, S&P 500 (1928-2025)
| Return Category | Number of Years | Percentage of Years | Most Recent Example |
|---|---|---|---|
| Positive return (any gain) | ~71 | ~72% | 2025 (+17.9%) |
| Return above 20% | ~29 | ~30% | 2024 (+25.0%) |
| Return between 0% and 20% | ~42 | ~43% | 2025 (+17.9%) |
| Negative return (any loss) | ~27 | ~28% | 2022 (-18.1%) |
| Loss greater than 20% | ~9 | ~9% | 2008 (-37.0%) |
Average Annual Return by Asset Class
The table below is the most widely cited comparative dataset in long-run investing. It draws from the Damodaran/NYU Stern annual return series covering 1928 through 2025, which is updated each January and represents the most comprehensive freely available multi-asset return dataset. U.S. stocks (S&P 500) have outperformed every other major asset class over this 97-year period by a meaningful margin. Small-cap stocks (Russell 2000 predecessor series) show a higher average but with substantially more volatility and concentration risk. Bonds, gold, cash, and real estate each play meaningful diversification roles despite lower average returns.
Average Annual Long-Run Return by Asset Class (1928-2025)
| Asset Class | Avg Annual Nominal Return | Avg Annual Real Return | Approx. Std Dev (Volatility) | Source / Proxy |
|---|---|---|---|---|
| U.S. Stocks (S&P 500) | ~10.2% | ~6.9% | ~15-16% | S&P 500 total return; Damodaran/NYU |
| U.S. Small-Cap Stocks | ~11.7% | ~8.5% | ~20-22% | Ibbotson SBBI small-cap series; Damodaran |
| International Developed Stocks | ~8-9% | ~5-6% | ~17-18% | MSCI EAFE; Deutsche Bank LT Return Study |
| Emerging Market Stocks | ~9-11%* | ~6-8%* | ~22-25% | MSCI EM; data from 1988 |
| U.S. Bonds (10-yr Treasury) | ~4.5% | ~1.5% | ~8-10% | 10-year constant maturity; Damodaran/NYU |
| Gold | ~5.1% | ~2.1% | ~15-18% | London gold fix; Damodaran/NYU |
| U.S. Real Estate (REIT proxy) | ~4.2% | ~1.2% | ~15-17% | Case-Shiller / NAREIT; Damodaran/NYU |
| Cash (3-month T-Bills) | ~3.3% | ~0.3% | ~1-2% | 3-month T-bill rate; Damodaran/NYU |
| Inflation (CPI) | ~3.0% | N/A | ~3-4% | BLS CPI; Federal Reserve FRED |
Return vs. Volatility (Risk-Adjusted Comparison)
The Sharpe ratio approximates the excess return earned per unit of risk taken (standard deviation), using the risk-free rate as baseline. Higher is better. These figures are long-run approximations and vary meaningfully across sub-periods.
| Asset Class | Avg Annual Return | Approx. Std Dev | Approx. Long-Run Sharpe Ratio | Risk-Adjusted Rank |
|---|---|---|---|---|
| U.S. Stocks (S&P 500) | ~10.2% | ~15-16% | ~0.40-0.45 | 1 |
| U.S. Small-Cap Stocks | ~11.7% | ~20-22% | ~0.38-0.42 | 2 |
| Intl Developed Stocks | ~8-9% | ~17-18% | ~0.28-0.35 | 3 |
| U.S. Bonds (10-yr Tsy) | ~4.5% | ~8-10% | ~0.20-0.28 | 4 |
| Gold | ~5.1% | ~15-18% | ~0.12-0.18 | 5 |
| Real Estate | ~4.2% | ~15-17% | ~0.09-0.14 | 6 |
| Cash (T-Bills) | ~3.3% | ~1-2% | ~0.00 | 7 |
Asset Class Correlation in Down Markets
During significant equity market declines (S&P 500 drawdowns exceeding 20%), correlations between asset classes tend to shift. The table below shows how each asset class has historically behaved during S&P 500 bear markets.
| Asset Class | Typical Behavior in S&P 500 Bear Markets | Historical Role |
|---|---|---|
| U.S. Stocks (S&P 500) | Declines by definition | Core return driver; highest long-run reward |
| U.S. Small-Cap Stocks | Typically falls more than S&P 500 | Higher beta; amplifies equity movements |
| U.S. Bonds (10-yr Tsy) | Often rises (flight to quality in most episodes) | Primary diversifier; inverse relationship with equities in most bear markets |
| Gold | Mixed; tends to rise during fear-driven declines | Inflation hedge and crisis hedge; uncorrelated to equities over time |
| Real Estate | Declined sharply in 2008; mixed otherwise | Long-duration asset; rate-sensitive; diversifies equity risk selectively |
| Cash (T-Bills) | Stable; no drawdown risk | Capital preservation; opportunity fund |
The asset class return data above is the empirical foundation for one of the most consistent principles in long-run financial planning: that broadly diversified exposure to global equities, held over sufficiently long time horizons and adjusted as conditions evolve, has historically been the most effective way to build and preserve wealth. How that exposure is constructed, what percentage is held in each asset class, and how it shifts over time as a client approaches and moves through retirement, is where active management and comprehensive financial planning add their most meaningful value.
Volatility and Drawdowns
Average return figures do not capture the experience of investing. The S&P 500 has averaged roughly 10% per year over a century while spending significant stretches of that century below prior peak levels. Understanding the historical frequency, depth, and recovery time of market declines is essential context for any long-run return expectation.
Average Return, Volatility, and Worst Drawdown by Index
| Index | Avg Annual Return | Annualized Std Dev | Worst Single-Year Loss | Worst Peak-to-Trough Drawdown |
|---|---|---|---|---|
| S&P 500 | ~10.2% | ~15-16% | -43.8% (1931) | ~-82% (1929-1932 Great Depression) |
| Dow Jones (DJIA) | ~9.5-10.3% | ~16-18% | ~-53% (1931) | ~-89% (1929-1932) |
| Nasdaq 100 | ~13.8% | ~22-25% | ~-78% (2000-2002) | ~-83% (2000-2002 dot-com) |
| Russell 2000 | ~7.5-8.5% | ~19-22% | ~-34% (2008) | ~-60% (2008-2009 GFC) |
S&P 500 Bear Markets and Corrections Since 1928
| Decline Category | Definition | Occurrences Since 1928 | Avg Depth | Avg Duration (days to trough) | Avg Recovery Time |
|---|---|---|---|---|---|
| Pullback | 3-5% decline | ~74 | ~4% | ~14 days | Weeks |
| Correction | 5-10% decline | ~51 | ~7% | ~33 days | 1-3 months |
| Deeper correction | 10-20% decline | ~18 | ~14% | ~129 days | 4-12 months |
| Bear Market | 20%+ decline | ~14 | ~35% | ~406 days | 1-5+ years |
Major S&P 500 Bear Markets — Depth and Recovery Time
| Bear Market | Peak-to-Trough Decline | Duration (Peak to Trough) | Recovery to Prior Peak |
|---|---|---|---|
| Great Depression (1929-1932) | ~-82% | ~996 days (~33 months) | ~25 years (nominal) |
| WWII selloff (1937-1942) | ~-60% | ~540 days (~18 months) | ~8 years |
| Dot-Com Crash (2000-2002) | ~-49% | ~685 days (~23 months) | ~7 years |
| Global Financial Crisis (2007-2009) | ~-57% | ~517 days (~17 months) | ~5.5 years |
| COVID-19 Crash (2020) | ~-34% | ~33 days (fastest ever) | ~5 months |
| 2022 Bear Market | ~-25% | ~282 days (~9 months) | ~1.5 years |
Bear markets are the price of admission for long-run equity returns. The data above shows that even the worst historical entry point for U.S. equities, September 1929 at the peak of the Roaring Twenties, produced a positive total return over a 30-year holding period. What the data also shows is that sequence of returns risk, the risk of experiencing significant drawdowns early in retirement when portfolio withdrawals begin, is one of the most meaningful planning challenges for clients approaching or in retirement. Managing that risk through appropriate asset allocation, dynamic withdrawal strategies, and active monitoring is a core function of comprehensive financial planning.
Methodology and Data Notes
All return figures in this report are total returns including reinvested dividends unless noted as price-only. Long-run averages are arithmetic means of annual returns unless specified as annualized (geometric mean/CAGR). Inflation-adjusted figures use the Bureau of Labor Statistics Consumer Price Index via Federal Reserve FRED. All data is as of the most recent available figures at the time of publication (June 2026).
The S&P 500 data series begins in 1926 when the precursor Composite Index was composed of 90 companies; the modern 500-company structure dates to 1957. Returns prior to 1957 use the earlier composite series, which is standard practice in long-run return research. The Dow Jones Industrial Average data series begins in May 1896. The Nasdaq 100 data begins in 1985. The Russell 2000 data begins in 1984.
Decade figures are approximate averages of annual return data and should be understood as directional rather than precise. Minor rounding differences exist between sources due to methodology, rebalancing assumptions, and dividend reinvestment treatment.
References
- Damodaran, Aswath. "Annual Returns on Stock, T.Bonds and T.Bills: 1928-Current." NYU Stern School of Business. pages.stern.nyu.edu/~adamodar. Updated January 2026.
- Carlson, Ben. "Historical Returns For Stocks, Bonds, Cash, Housing & Gold (2025)." A Wealth of Common Sense. awealthofcommonsense.com. Published January 11, 2026.
- Slickcharts. "S&P 500 Total Returns by Year Since 1926." slickcharts.com/sp500/returns. Data as of June 4, 2026.
- Slickcharts. "Dow Jones Historical Returns by Year Since 1886." slickcharts.com/dowjones/returns. Accessed June 2026.
- Trade That Swing (Mitchell, Cory, CMT). "Historical Average Stock Market Returns for S&P 500." tradethatswing.com. Updated March 2026.
- Trade That Swing (Mitchell, Cory, CMT). "Historical Average Returns of the Russell 2000 Index." tradethatswing.com. Updated March 2026.
- Trade That Swing (Mitchell, Cory, CMT). "Historical Average Returns for Nasdaq 100 Index." tradethatswing.com. Updated March 2026.
- Fidelity Investments. "What is the S&P 500 and stock market average return?" fidelity.com. Updated December 2025.
- SoFi. "Average Stock Market Return: S&P 500 Historical Performance." sofi.com. Updated April 2026.
- DQYDJ. "Dow Jones Industrial Average Historical Return Calculator." dqydj.com. Accessed June 2026.
- DQYDJ. "S&P 500 Historical Return Calculator." dqydj.com. Accessed June 2026.
- A Wealth of Common Sense (Carlson, Ben). "Deconstructing 10, 20 & 30 Year Stock Market Returns." awealthofcommonsense.com. Published February 2023.
- Wall Street Courier. "Navigating Stock Market Volatility: S&P 500 Drawdowns Analysis & Strategies." wallstreetcourier.com. Updated April 2026.
- MFS Research. "Market Declines: A History of Recoveries." mfs.com. Data through December 2025.
- Deutsche Bank Research. "Long-Term Asset Return Study." Reid, Jim and Pozdnyakova, Galina. 2024 edition.
- Federal Reserve Bank of St. Louis (FRED). Consumer Price Index for All Urban Consumers (CPIAUCSL). fred.stlouisfed.org. Accessed June 2026.
- Morningstar / Ibbotson SBBI. "Stocks, Bonds, Bills and Inflation Yearbook." Morningstar, Inc. Annual editions 1926-present.
Disclosure
This material was prepared by Journey Advisory Group, LLC for informational and research purposes only. It is not intended to serve as a substitute for personalized investment advice or as a recommendation or solicitation of any particular security, strategy, or investment product. Economies and markets fluctuate. Actual economic or market events may turn out differently than anticipated. Facts presented have been obtained from sources believed to be reliable; however, Journey Advisory Group cannot guarantee the accuracy or completeness of such information, and certain information may have been condensed or summarized from its original source.
SEC Registration does not constitute an endorsement of the firm by the SEC nor does it indicate that the advisor has attained a particular level of skill or ability. Securities investments contain risks including the possible loss of principal. Past performance does not guarantee future results. All return figures are historical and do not represent the performance of any Journey Advisory Group investment product or client portfolio.
Journey Advisory Group is a fee-based, SEC-registered Registered Investment Adviser. Additional information about our services, fees, and potential conflicts of interest is available in Form ADV Parts 2A and 2B at adviserinfo.sec.gov or by contacting us directly at info@JourneyAdvisory.Group or 800-749-7143.