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The average stock market return over the past 10 years

Average stock market return over the past 10 years
Keeping investments over a long period of time is the best way to ensure that your investments will grow.
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  • The average stock market return for 10 years is 9.2%, according to Goldman Sachs data for the past 140 years.
  • The S&P 500 has done slightly better than that, with an average annual return of 13.6%.
  • However, the average return looks very different from year to year.
  • Keeping investments over a long period of time is the best way to ensure that your investments will grow, according to experts like Warren Buffett.
  • Start investing today with SoFi Active Invest »

According to global investment bank Goldman Sachs, 10-year stock market returns have averaged 9.2% over the past 140 years. Between 2010 and 2020, however, the investing firm notes that the S&P 500 has done slightly better than the historic 10-year average, with an annual average return of 13.6% in the past 10 years.

But the stock market return you'll see today could be very different from the average stock market return over the past 10 years. There are a few reasons why you could see a bigger or smaller return than the average. 

The average annual return from the S&P 500 doesn't necessarily represent the whole market or all investments

There are many stock market indexes, including the S&P 500. This index includes 500 of the largest US companies, and some investors use the performance of this index as a measure of how well the market is doing.

Here's how the yearly annual returns from the S&P 500 have looked over the past 10 years, according to Berkshire Hathaway data that includes earnings from dividends paid by stocks: 

YearS&P 500 annual return
201015.1%
20112.1%
201216%
201332.4%
201413.7%
20151.4%
201612%
201721.8%
2018-4.4%
201931.5%

Berkshire Hathaway has tracked S&P 500 data back to 1965. According to the company's data, the compounded annual gain in the S&P 500 between 1965 and 2019 was 10%. 

While that sounds like a good overall return, not every year has been the same.

While the S&P 500 fell more than 4% between the first and last day of 2018, values and dividends increased by 31.5% during 2019. However, when many years of returns are put together, the ups and downs start to even out. 

It's worth noting that these numbers are calculated in a way that may not represent actual investing habits. These figures are based on data from the first of the year compared to the end of the year. But the typical person doesn't buy on the first of the year and sell on the last day. While they're indicative of the growth of the investment over the year, they're not necessarily representative of an actual person's return, even in one year's time.

Also, when you're buying stocks, you're not necessarily buying the entire S&P 500. Some investors choose to buy shares of individual companies on the S&P 500. Some opt for mutual funds, which allow investors to buy a portion of several different stocks or bonds collectively. These individual mutual funds or stocks all have their own average annual return, and that particular fund's return may not be the same as the S&P 500's return. 

Plus, even if you an invest in an S&P 500 index fund, a high expense ratio — the cost of owning your shares — may reduce your overall returns to below average. And, of course, past performance does not predict future returns. Just because this is the S&P's average return, doesn't mean you can count on it going forward.

The best way to get the average return on your investments is long-term buy-and-hold investing

Investing experts, including Warren Buffett and investing author and economist Benjamin Graham, say the best way to build wealth is to keep investments for the long term, a strategy called buy-and-hold investing

There's a simple reason why this works: While investments are likely to go up and down with time, keeping them for a long period helps even out these ups-and-downs. Like the S&P 500's changes noted above, keeping investments for the long term could help investments and their returns get closer to that average. 

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