Average S&P 500 Return: About 10% Per Year Over the Long Run

The S&P 500’s long‑run performance averages just under 10% a year when total returns—including dividends—are considered, a figure that has become a benchmark for investors planning for retirement or other long‑term goals [1].

Key takeaways

• The compound annual growth rate (CAGR) for total returns since 1928 is 9.98% per year [1].
• The arithmetic mean of yearly returns over the same period is higher, at about 11.7% [1].
• Inflation‑adjusted (real) returns are roughly three percentage points lower, putting the real CAGR near 6.8% since 1928 [2].
• Different time frames produce slightly different averages; for example, the 1964‑2025 window shows a 10.5% CAGR [1].

How the 10% Figure Is Calculated

The “average stock market return” can be measured in several ways. The most common metric is the total‑return CAGR, which incorporates both price appreciation and dividend income. Using data from 1928 through the third quarter of 2026, the S&P 500’s total‑return CAGR is 9.98%, essentially the “just under 10%” rule of thumb cited by many financial guides [1]. By contrast, the arithmetic average of each year’s total return over that span is 11.7%, a figure that can be misleading if presented without context because it does not account for the compounding effect of gains and losses over time [1].

Why Reported Averages Vary

Several factors explain why different sources quote slightly different numbers. First, the chosen historical window matters: the period from 1964 to 2025 yields a 10.5% CAGR, a modest uptick from the 1928‑2026 figure [1]. Second, some reports present nominal returns—raw dollar gains—while others adjust for inflation; the latter reduces the long‑run average by about three points, bringing the real CAGR to roughly 6.8% for the century‑long span [2]. Finally, a distinction is sometimes made between price‑only returns (excluding dividends) and total returns; price‑only figures are considerably lower, but most reputable analyses, including those cited here, focus on total returns because dividends have contributed a sizable share of the index’s performance [1].

Why it matters

Understanding that the S&P 500 has historically delivered about a 10% nominal annual return, but only around 6‑7% after inflation, helps investors set realistic expectations for long‑term wealth building. The variance between CAGR and arithmetic mean underscores the importance of compounding, while the inflation‑adjusted figure reminds savers that purchasing power grows more modestly than headline numbers suggest. As market cycles continue, these historical benchmarks serve as a reference point for portfolio planning, risk assessment, and the evaluation of strategies such as dollar‑cost averaging, which can mitigate the impact of short‑term volatility.