Wealthy PotAverage Stock Market Return: About 10% a Year Since 1928, and What That Really Means
The US stock market has returned about 10% a year on average since 1928. Measured on the S&P 500 and its predecessors with dividends included, the compound annual return from 1928 through 2025 was 10.02%, according to the historical dataset maintained by Professor Aswath Damodaran at NYU's Stern School of Business. After inflation it was 6.78%. Those are long-run figures. In any single year the market almost never returns anything close to 10%, it fell in roughly one year out of four, and the average you can expect depends on which "average" you mean. This page sets out the numbers and what each one is good for.
Table of Contents
The Short Answer
- 10.02% a year compounded is the S&P 500's return with dividends from 1928 through 2025. The simple average of the 98 annual returns is higher, 11.85%.
- 6.78% a year is the compound return after inflation over the same period.
- Over the last 30 calendar years (1996 to 2025) the compound return was 10.26%; over the last 20, 10.90%.
- Through September 30, 2026, S&P Dow Jones Indices reports annualized total returns of 15.7% (1 year), 22.9% (3 years), 13.8% (5 years) and 15.3% (10 years).
- The market fell in 26 of 98 years. It returned between 8% and 12% in only 4 of them.
- No 20-year period since 1928 lost money; the worst returned 2.37% a year.
- The average Vanguard 401(k) participant earned 9.0% a year over the five years to the end of 2025, and 19.3% in 2025 alone.
The Long-Run Average, Measured Properly
"The stock market" in these figures means large US companies: the S&P 500 since it was created in 1957, and earlier large-company indices before that. Returns include dividends, which are left out of the price-only index figures quoted on the news. They matter: by Damodaran's index levels, price changes alone compounded at about 6.3% a year from the end of 1927 to the end of 2025, against 10.02% with dividends. The standard free source is Damodaran's annual dataset, which academics and practitioners use for long-run return assumptions. Its latest edition runs through 2025.
| Period | Compound annual return | After inflation |
|---|---|---|
| 1928–2025 (98 years) | 10.02% | 6.78% |
| 1976–2025 (50 years) | 11.92% | 8.04% |
| 1996–2025 (30 years) | 10.26% | 7.54% |
| 2006–2025 (20 years) | 10.90% | 8.17% |
| 2016–2025 (10 years) | 14.68% | 11.12% |
The 10% figure is not a recent artefact or a cherry-picked window: it holds for the full record and for the most recent 30 years. The last ten years ran well above it, which is a reason for caution rather than extrapolation. Over the same 98 years, $100 invested at the start of 1928 grew to about $1.16 million by the end of 2025 with dividends reinvested, against about $7,700 in 10-year Treasury bonds and about $2,600 in Treasury bills, by Damodaran's figures.
Why There Are Two Averages
Ask for "the average return" and you can be given either of two numbers, and for stocks they differ by nearly two percentage points:
- The arithmetic average adds up each year's return and divides by the number of years: 11.85% for 1928 to 2025.
- The compound (geometric) average is the single steady rate that turns the starting amount into the ending amount: 10.02%.
The compound figure is what an investor actually experienced. The gap comes from volatility. A simple example shows why: a portfolio that gains 50% one year and loses 50% the next has an arithmetic average return of 0%, but $100 becomes $150 and then $75, a loss of 25%, or about 13.4% a year compounded. The bigger the swings, the further the compound return falls below the simple average. When a projection or an advertisement quotes "average returns" of 11% or 12% for stocks, check which average it is. For planning how money grows over decades, use the compound figure; our guide to how compound interest works explains the mechanics.
The Return After Inflation
Consumer prices rose about 3.04% a year from 1928 to 2025. Strip that out and the S&P 500's compound real return was 6.78%. In real terms, $100 at the start of 1928 grew to about $61,700 in 1928 purchasing power, not $1.16 million.
The real return is the one that matters for retirement planning, because what you need is purchasing power, not a nominal balance. Using 10% in a projection that also lists future expenses in today's dollars double-counts growth. Our article on inflation's impact on investment returns goes further.
Recent Returns: 1, 3, 5 and 10 Years
For the most current figures, the index provider itself is the primary source. S&P Dow Jones Indices reports these annualized total returns for the S&P 500, as of the end of September 2026:
| Period to September 30, 2026 | Annualized total return |
|---|---|
| Year to date (9 months) | 12.7% (not annualized) |
| 1 year | 15.7% |
| 3 years | 22.9% |
| 5 years | 13.8% |
| 10 years | 15.3% |
Every figure in that table is above the long-run 10%. The three years to September 2026 averaged nearly 23% a year. Periods like this are part of the long-run average, and so are the periods that followed them historically, such as 2000 to 2009, when the 10-year compound return was negative. If you are deciding whether a broad index fund is the right core holding, our guide to investing in S&P 500 index funds covers costs and alternatives.
What a Typical Year Looks Like
The single most misleading thing about a 10% average is that it suggests a typical year returns about 10%. Across Damodaran's 98 annual returns, the market did that, give or take two points, only four times: 1968, 1993, 2004 and 2016. Instead:
| Annual S&P 500 return, 1928–2025 | Number of years | Share |
|---|---|---|
| Loss of more than 20% | 6 | 6% |
| Any loss | 26 | 27% |
| Gain between 8% and 12% | 4 | 4% |
| Gain of more than 20% | 36 | 37% |
The worst years were 1931 (-43.8%), 2008 (-36.6%) and 1937 (-35.3%). The best were 1954 (+52.6%), 1933 (+50.0%) and 1935 (+46.7%). Recent years show the range: 2022 lost about 18%, then 2023 and 2024 each gained around 25%, and 2025 about 18%, by Damodaran's figures.
Time smooths this out, though not completely. Our calculation of every rolling period in the data:
| Holding period | Periods with a loss | Worst compound annual return |
|---|---|---|
| 1 year | 26 of 98 (27%) | -43.8% (1931) |
| 5 years | 11 of 94 (12%) | -12.7% a year (1928–1932) |
| 10 years | 5 of 89 (6%) | -1.7% a year (1929–1938) |
| 15 years | 1 of 84 (1%) | -0.2% a year (1929–1943) |
| 20 years | 0 of 79 | +2.4% a year (1929–1948) |
This is the real case for a long horizon, and for staying invested through the bad years; see why time in the market beats timing the market and the episodes in our stock market history lessons. Past patterns are not a guarantee: a 20-year period with a loss has not happened in this record, which is a statement about the past, not a promise.
Average Return on a 401(k)
A 401(k) does not have a return of its own. It earns whatever its investments earn, and most participants hold a mix of US stocks, international stocks and bonds, often in a target-date fund, so the average 401(k) return can land above or below the S&P 500 in any given year. The best primary data is from Vanguard's How America Saves 2026, covering its defined contribution plan participants:
| Period ended December 31, 2025 | Average participant total return |
|---|---|
| 2025 (1 year) | 19.3% |
| 5 years, annualized | 9.0% |
| 2024 | 13.7% |
| 2023 | 18.1% |
| 2022 | -15.8% |
| 2021 | 14.6% |
The spread between savers is wide. Over the five years to 2025, the median participant earned 9.4% a year, while the bottom 5% earned less than 3.9% and the top 5% more than 13.7%. Vanguard attributes the variation largely to asset allocation. People in a single target-date fund were tightly bunched (5.6% to 13.2% from the 5th to the 95th percentile); people choosing their own funds ranged from 2.6% to 14.2%.
So a reasonable answer to "what is the average return on a 401(k)" is: about 9% a year over the last five years for Vanguard participants, a period that included the 2022 decline, with your own figure set mainly by how much of the account is in stocks. Check your plan statement's personal rate of return, and project your balance with the 401(k) calculator. To see how your balance compares, see average 401(k) balance by age, average IRA balance by age and average retirement savings by age.
Using the Average in Your Own Planning
Some hypothetical arithmetic shows how much the choice of average matters. $10,000 compounding for 30 years:
- At 10% a year (the long-run nominal compound return): about $174,500.
- At 6.8% a year (the long-run real return): about $71,600 in today's money.
These are illustrations, not forecasts. Nobody can tell you what the next 30 years will return, and a portfolio that holds bonds, pays fund fees or is in a taxable account will earn less than the index. Three practical rules follow from the data above:
- Plan with a real return, not 10%. If your spending targets are in today's dollars, use an after-inflation figure, and consider a lower one for a portfolio that holds bonds.
- Expect losing years. On the historical record, a stock-heavy investor should expect a loss roughly one year in four, and a fall of 20% or more about once every 16 years.
- Match the horizon to the money. Money needed within five years has a meaningful chance of being worth less when you need it. That is why retirees keep cash and bonds for near-term withdrawals; see our average retirement age page for when that horizon usually starts.
Try your own numbers in the compound interest calculator.
Sources & Methodology
- Aswath Damodaran, NYU Stern, Historical Returns on Stocks, Bonds and Bills: the histretSP.xls spreadsheet, annual S&P 500 returns with dividends, 1928–2025, CPI inflation and real returns.
- S&P Dow Jones Indices, S&P 500: annualized total returns, month-end September 30, 2026.
- Vanguard, How America Saves 2026: participant total and personal returns, 2021–2025, and their distribution.
Method notes. Long-run averages, real returns, the distribution of annual returns and the rolling-period analysis use Damodaran's annual S&P 500 series. His 98-, 50- and 10-year averages are published in the spreadsheet; we recomputed them from the annual column and got identical results, then used the same code for the 30- and 20-year figures, the counts and the rolling windows. Damodaran computes each year's return as the price change plus dividends paid, divided by the starting index level, so his annual figures can differ slightly from S&P Dow Jones Indices' official total return, which reinvests dividends. Recent-period returns therefore come from S&P Dow Jones Indices directly. S&P notes that index values before the 1957 launch are back-tested. Index returns carry no fees or taxes.
This article is for general information and is not investment advice. Figures are from Aswath Damodaran's NYU Stern dataset, S&P Dow Jones Indices and Vanguard, checked against the primary sources on 2026-10-04. Past performance does not guarantee future results; all projections on this page are hypothetical illustrations, not forecasts. Consider speaking to a qualified professional before making investment decisions.
FAQ
What is the average stock market return per year?
About 10% a year compounded for the S&P 500 with dividends: 10.02% from 1928 through 2025. The simple average of annual returns is 11.85%. After inflation, the compound return is 6.78%.
What is the average return of the S&P 500 over the last 10 years?
15.3% a year, annualized total return, for the ten years to September 30, 2026, per S&P Dow Jones Indices. For the calendar years 2016 to 2025 it was 14.68% by Damodaran's data.
What is the average stock market return after inflation?
6.78% a year compounded from 1928 through 2025, after CPI inflation of about 3.04% a year. Over 1996 to 2025 the real return was 7.54%.
What is a good average annual return on a 401(k)?
Vanguard participants averaged 9.0% a year over the five years to the end of 2025, with a median of 9.4%. The middle half of participants earned between about 7.6% and 10.1% a year. Your own return depends mainly on how much of the account is in stocks.
How often does the stock market go down?
In 26 of the 98 calendar years from 1928 to 2025, about 27%. It lost more than 20% in six of those years, most recently 2008.
Has the stock market ever lost money over 20 years?
Not in this record. Every calendar 20-year period from 1928 to 2025 had a positive compound return; the worst, 1929 to 1948, returned 2.37% a year before inflation. Ten-year losses have happened five times, including 1999 to 2008.
Is it realistic to expect 10% a year?
As a long-run average for an all-stock US portfolio before inflation, fees and taxes, it matches history. It is not a forecast, single years rarely land near it, and a mixed portfolio or a plan in today's dollars should use a lower figure.
What is the difference between average and annualized return?
The average (arithmetic) return is the simple mean of yearly returns. The annualized (compound) return is the steady yearly rate that produces the same ending value. Because of volatility the compound figure is lower: 10.02% against 11.85% for the S&P 500 since 1928.
Cite This Page
Journalists, educators and bloggers are welcome to cite these statistics. Please link back so readers can reach the primary sources and method notes.
"Average Stock Market Return: About 10% a Year Since 1928, and What That Really Means." Wealthy Pot, 2026. https://wealthypot.com/average-stock-market-return/
