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Historical Investment Returns

S&P 500, bonds, and inflation by decade with real vs nominal returns

Last Updated: Feb 2026

Key Numbers

S&P 500 Avg

~10% Nominal

Real Stock Return

~6.9%

Bonds Avg

~4.9% Nominal

Inflation Avg

~3.1%

Since 1928, U.S. stocks have averaged approximately 10% annually (nominal) while bonds have returned around 5%. Actual returns vary dramatically year-to-year, making time in the market — not timing the market — the key to smoothing volatility.

Long-Term Averages (1928–2025)

Asset Class	Nominal	Real	Best Year	Worst Year
S&P 500 (w/ dividends)	~10.0%	~6.9%	+52.6% (1954)	−43.8% (1931)
10-Year Treasury	~4.9%	~1.8%	+32.8% (1982)	−17.8% (2022)
3-Month T-Bills	~3.3%	~0.3%	+14.0% (1981)	+0.03% (2014)
Gold	~5.6%	~2.5%	+127% (1979)	−33% (1981)

Annualized geometric averages. Source: NYU Stern, 1928–2025.

The Power of Time

$100 Invested in 1928: Reinvested in the S&P 500, that $100 would be worth approximately $1,157,600 by end of 2025. The same $100 in 10-year Treasuries: ~$7,750. In T-bills: ~$2,578.

Positive Years: The S&P 500 has been positive in ~73% of calendar years since 1928. No rolling 20-year period has produced a negative total return.

Past performance caveat: Historical averages do not guarantee future results. Sequence of returns risk means your actual experience depends heavily on when you invest and withdraw, not just the long-run average.

Stock Returns by Decade

U.S. stocks have been the highest-returning major asset class over the long term, but with significant volatility. Individual decades have ranged from −5% to +19% annualized.

S&P 500 Returns by Decade

Decade	Total Return	Annualized	Context
1930s	−41%	−5.3%	Great Depression
1940s	+135%	+8.9%	WWII recovery
1950s	+487%	+19.4%	Post-war boom
1960s	+112%	+7.8%	Go-Go years, then Vietnam
1970s	+77%	+5.9%	Stagflation, oil crisis
1980s	+404%	+17.5%	Reagan bull market
1990s	+432%	+18.2%	Tech boom
2000s	−9%	−0.9%	Dot-com crash, 2008 crisis
2010s	+257%	+13.6%	Post-crisis recovery
2020–2025	+95%	+11.8%	COVID, AI boom

Recent Annual Returns (2020–2025)

Year	S&P 500	Small Cap	10-Yr Treasury
2020	+18.0%	+34.2%	+11.3%
2021	+28.5%	+22.4%	−4.4%
2022	−18.0%	−22.9%	−17.8%
2023	+26.1%	+5.2%	+3.9%
2024	+24.9%	+8.7%	−1.6%
2025	+17.8%	+16.5%	+7.8%

S&P 500 includes dividends reinvested. Source: NYU Stern. Data through December 2025.

Volatility matters: Despite averaging ~10% annually, the S&P 500 rarely returns close to 10% in any given year. Returns between −10% and +30% account for the majority of years — plan for variability, not averages.

Bond Returns

Bonds provide stability and income, historically returning 3–6% annually depending on type and duration. Returns are lower than stocks but with less volatility — except when interest rates rise sharply, as in 2022.

Historical Returns by Bond Type

Bond Type	Avg. Return (1928–2025)	Std. Deviation	Risk Profile
3-Month T-Bills	3.3%	3.0%	Near-zero volatility
10-Year Treasury	4.9%	7.7%	Moderate rate sensitivity
Baa Corporate	6.5%	8.3%	Rate + credit risk
Aggregate Bond Index	~5.0%	~5.5%	Diversified exposure

10-Year Treasury by Decade

Decade	Avg. Annual Return	Rate Environment
1980s	+12.6%	Rates falling from 15%+ peaks
1990s	+8.8%	Continued decline, disinflation
2000s	+6.4%	Low rates, flight to safety
2010s	+3.3%	Near-zero rates, QE
2020–2025	−0.3%	Rapid rate hikes, 2022 crash

2022 bond crash: The 10-year Treasury lost 17.8% — the worst bond year since 1928. Stocks and bonds fell simultaneously, challenging the traditional 60/40 portfolio assumption that bonds always cushion stock declines.

Inflation Impact

Inflation has averaged ~3.1% annually since 1928, reducing the S&P 500's nominal ~10% return to ~6.9% in real terms. Always use real (inflation-adjusted) returns when projecting future purchasing power.

Average Inflation by Decade

Decade	Avg. Inflation	Context
1970s	7.1%	Oil crisis, stagflation
1980s	5.5%	Volcker rate hikes, gradual decline
1990s	3.0%	Great Moderation
2000s	2.5%	Pre-crisis stability
2010s	1.7%	Below Fed's 2% target
2020s	4.8%	Post-COVID surge, 2022 peak at 9.1%

Impact on Purchasing Power

Time Horizon	$100 Buys What Used to Cost…	Purchasing Power Lost
10 years (at 3%)	$74	−26%
20 years (at 3%)	$55	−45%
30 years (at 3%)	$41	−59%

Use Real Returns for Planning

Project retirement needs with ~6–7% for stocks and ~1–2% for bonds rather than nominal returns to account for future purchasing power erosion.

Inflation-Protected Options

TIPS and Series I Bonds adjust for inflation automatically, providing a guaranteed real return for the portion of a portfolio where preserving purchasing power is the priority.

Sources

This content is for educational and informational purposes only and does not constitute financial, tax, or legal advice. Consult a qualified professional for guidance tailored to your situation.