The average return on the stock market over the past 10 years

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  • The S&P 500 has earned about 10.7% annually on average since it was introduced in 1957.
  • The index performed slightly better than the last decade, with a return of around 14.7% per annum.
  • Yields can vary greatly each year, but keeping investments over time can help.
  • Start investing today with SoFi Active Invest “

The average annual returns of the S&P 500 over the past decade have stood at around 14.7%, beating the long-term historical average of 10.7% since the benchmark index was introduced 65 years ago.

But the stock market return you will see today could be very different from the average stock market return of the last 10 years. There are a few reasons why you might see higher or lower-than-average returns during any given year.

The performance of the S&P 500 can vary significantly from year to year

There are many stock market indices, including the S&P 500. This index includes 500 of the largest US companies and some investors use its performance as a measure of market performance.

Here’s what the S&P 500’s annual returns have been like over the past 10 years, according to data from Berkshire Hathaway which includes dividend earnings:

Berkshire Hathaway tracked S&P 500 data through 1965. According to company data, the S&P 500’s compound annual earnings between 1965 and 2021 was 10.5%.

While it sounds like a good overall return, not all years have been the same.

While the S&P 500 fell more than 4% between the first and last day of 2018, its total return increased by 31.5% in 2019. In addition, the returns jumped from 18.4% in 2018 to 28. , 7% in 2021. However, when many years of returns are combined, the ups and downs start to equalize.

It is worth noting that these numbers are calculated in a way that may not represent actual investment habits. The data is based on the first year data compared with the end of the year. But the typical investor does not buy the first of the year and does not sell the last. While they are indicative of investment growth over the year, they are not necessarily representative of an actual investor’s return, even over a year.

Also, when you buy stocks, you are 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 stocks or bonds collectively. . These individual mutual funds or stocks all have their own average annual returns, and that particular fund’s return may not be the same as the S&P 500.

Also, even if you invest in an S&P 500 index fund, a maximum


expense report

– the cost of owning your shares – can reduce your overall returns below average. And, of course, past performance does not predict future returns. Just because that’s the average return on the S&P 500 doesn’t mean you can count on it in the future.

Buy-and-hold evens out market fluctuations

Investment experts, including Warren Buffett and investment author and economist Benjamin Graham, say the best way to create wealth is to keep investing long-term, a strategy called buy-and-hold investing.

There is a simple reason why it works. While investments are likely to rise and fall over time, holding them over a long period helps offset these ups and downs. Like the changes in the S&P 500 mentioned above, holding investments long-term could help investments and their returns approach that average.

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