Average Stock Market Returns: 9.8% Per Year

What is the Average Stock Market Return?

The average stock market return is the average annualized return on investment in the stock market. It is calculated by taking the total return on investment (including capital gains and dividends) over a period of time and dividing it by the number of years in that period.

How is the Average Stock Market Return Calculated?

The average stock market return is typically calculated using data from the S&P 500 index, which is a widely diversified index of 500 large-cap stocks traded on the New York Stock Exchange and the Nasdaq. The S&P 500 is considered a good representation of the overall US stock market.

The average stock market return is often quoted as a long-term average, such as the average annualized return over the past 10 years or the past 20 years. However, it is important to note that the average stock market return is not guaranteed and can vary significantly from year to year.

What is the Historical Average Stock Market Return?

The historical average stock market return is approximately 9.8% per year. This number is based on data from the S&P 500 index over the past 100 years. However, it is important to note that the average stock market return has not been constant over time. There have been periods of high returns, such as the 1990s, and periods of low returns, such as the 2000s.

What is the Expected Average Stock Market Return?

The expected average stock market return is the average annualized return that investors can expect to earn on their stock market investments over the long term. The expected average stock market return is typically based on historical data and market forecasts.

What Factors Affect the Average Stock Market Return?

The average stock market return is affected by a number of factors, including:

• Economic growth: The rate of economic growth can affect the average stock market return. A strong economy can lead to higher corporate profits and higher stock prices.
• Inflation: Inflation can erode the value of stock market returns. When inflation is high, the purchasing power of investors' returns is reduced.
• Interest rates: Interest rates can affect the average stock market return. When interest rates are high, investors may be more inclined to invest in bonds rather than stocks.
• Political stability: Political stability can affect the average stock market return. Uncertainty about the future can lead investors to sell their stocks and move into safer investments.
• Global events: Global events, such as wars and natural disasters, can affect the average stock market return. These events can create uncertainty and lead to a decline in stock prices.

How Can I Earn the Average Stock Market Return?

There are a few ways to earn the average stock market return. One way is to invest in a diversified portfolio of stocks. Diversification can help to reduce the risk of losing money in the stock market. Another way to earn the average stock market return is to invest in a low-cost index fund. Index funds are passively managed funds that track the performance of a particular index, such as the S&P 500 index.

Is the Average Stock Market Return a Good Investment?

The average stock market return is a good investment for long-term investors. The stock market has historically outperformed other investments, such as bonds and cash, over the long term. However, it is important to remember that the stock market is a volatile investment. There will be periods of high returns and periods of low returns. Investors should be prepared to ride out the ups and downs of the market and to stay invested for the long term.

Additional Insights on Average Stock Market Returns

Average Stock Market Returns for Different Time Periods

The average stock market return can vary significantly depending on the time period being considered.

Source: S&P Dow Jones Indices

Average Stock Market Returns for Different Types of Investors

The average stock market return can also vary depending on the type of investor.

Source: Vanguard

Tips for Earning the Average Stock Market Return

• Invest early and often. The longer you invest, the more time your money has to grow.
• Diversify your portfolio. Don't put all of your eggs in one basket. Invest in a variety of stocks, bonds, and other assets.
• Rebalance your portfolio regularly. As your investments grow, you may need to rebalance your portfolio to maintain your desired asset allocation.
• Stay invested for the long term. The stock market is a volatile investment. There will be periods of high returns and periods of low returns. Investors who stay invested for the long term are more likely to earn the average stock market return.

Conclusion

The average stock market return is a good investment for long-term investors. The stock market has historically outperformed other investments, such as bonds and cash, over the long term. However, it is important to remember that the stock market is a volatile investment. There will be periods of high returns and periods of low returns. Investors should be prepared to ride out the ups and downs of the market and to stay invested for the long term.