Historical Investment Returns

The S&P 500 has returned approximately 10% per year nominally and ~6.9% after inflation since 1928, based on NYU Stern data. Over shorter, more recent windows the average is higher: roughly 14.8% annualized over the last 10 years (2016–2025) and 10.4% over the last 30 years (1996–2025). All figures assume dividends are reinvested. For retirement planning, most advisors use a conservative real return assumption of 6–7% for stocks rather than the full nominal ~10%, to account for inflation eroding purchasing power.

The S&P 500 has finished positive in approximately 73% of calendar years since 1928 — roughly 3 out of every 4 years. Down years cluster around specific shocks (the Great Depression, dot-com bust, 2008 financial crisis, 2022 rate hikes) rather than being randomly distributed. Crucially, no rolling 20-year period has ever produced a negative total return, which is why time horizon is the single most important variable in stock market investing. The longer you stay invested, the more the annual volatility averages out.

No. Every rolling 20-year window from 1928 through 2025 has produced a positive total return for the S&P 500 including dividends. Even the two worst starting points — investing just before the 1929 crash and just before the 2000 dot-com peak — still produced positive returns over the subsequent 20 years. This is why investors with a 20+ year horizon (most retirement savers) are generally advised to maintain meaningful stock exposure: the historical evidence for long-run positive returns is very strong, even after accounting for major crises.

For planning purposes, most financial planners recommend using 6–7% real (inflation-adjusted) for a stock-heavy portfolio rather than the full 10% nominal average. This accounts for the ~3% long-run inflation drag and builds in a modest margin of safety. For a balanced 60/40 stock/bond portfolio, a real return assumption of 4–5% is common. Avoid using the 10% nominal figure without adjusting your spending targets for inflation — it overstates future purchasing power by a wide margin over a 30-year retirement.

Over the full 1928–2025 period, stocks have outperformed every other major asset class: the S&P 500 returned ~10.0% annually vs. ~4.9% for 10-year Treasuries, ~3.3% for 3-month T-bills, and ~5.6% for gold. The gap compounds dramatically over time — $100 invested in stocks in 1928 grew to roughly $1.16 million by end of 2025, while the same $100 in Treasuries grew to ~$7,750 and in T-bills to ~$2,578. However, stocks also carry the most volatility: worst single year −43.8% (1931) vs. −17.8% for bonds (2022) and near-zero worst year for T-bills. The appropriate mix depends on your time horizon and risk tolerance, not just on historical return maximization.