While the long‑term average annual return of the S&P 500 has landed near 10–11% with dividends reinvested, individual years rarely fall neatly into that range. In fact, history shows that only about one‑third of years have delivered returns between 5% and 10%. The majority have been well above or well below that band.[slickcharts.com], [pages.stern.nyu.edu]
Annual returns have been strikingly uneven. Since the 1920s, roughly 70% of years finished positive, but many of those gains were far stronger than “normal”—often 15%, 20%, or even 30% or more. At the same time, downturns are unavoidable: about one in four years has produced a negative return, including several declines greater than 20%. These extremes—both good and bad—are what drive the long‑term average, not steady mid‑single‑digit results year after year. [sp500live.co], [us500.com]
The key takeaway for investors is that expecting smooth, predictable annual returns can lead to frustration or poor timing decisions. The market does not reward patience evenly—it does so inconsistently, often clustering strong gains around periods of uncertainty. Over the last century, the S&P 500 has demonstrated that long‑term success has come not from hitting an “average” return each year, but from staying invested through a wide range of outcomes and allowing exceptional years to outweigh the difficult ones.
History reminds us that actual yearly results are usually anything but average—and that embracing this reality is essential for long‑term investors.
Important Disclosures:
Investing involves risks including possible loss of principal. No investment strategy or risk management technique can guarantee return or eliminate risk in all market environments.
The opinions voiced in this material are for general information only and are not intended to provide specific advice or recommendations for any individual. All performance referenced is historical and is no guarantee of future results. All indices are unmanaged and may not be invested into directly. All investing involves risk including loss of principal. No strategy assures success or protects against loss. The economic forecasts set forth in this material may not develop as predicted and there can be no guarantee that strategies promoted will be successful. The Standard & Poor’s 500 Index is a capitalization weighted index of 500 stocks designed to measure performance of the broad domestic economy through changes in the aggregate market value of 500 stocks representing all major industries.
LPL Tracking #731836