What is the average stock market return?
Understanding how long-term averages are calculated can help put market volatility into context.
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Key takeaways
The S&P 500 has historically delivered about 10–11% average annual returns, or 6–7% after inflation, including reinvested dividends.
Year-to-year performance can vary widely, but 30-year periods tend to smooth out volatility, showing consistent long-term growth despite recessions.
Balancing your portfolio with lower-risk options like certificates of deposit (CDs) or high-yield savings accounts can help mitigate risks.
The historical average stock market return
When talking about stock market returns, the Standard & Poor’s 500 Index, or S&P 500, is often used as the standard benchmark for measuring the market’s performance. Since its inception in 1957, this index has delivered an average return of roughly 10 to 11% annually,1 or about 6 to 7% when adjusted for inflation. This number is typically referred to as the measure of the average annual stock market return and includes both price growth and reinvested dividends over multiple decades.
However, it may be worth noting that historical averages do not mean that your return will be precisely 10% any given year, due to the ever-changing nature of the market. Average figures are used more generally to help build a long-term strategy.
Furthermore, past performance does not guarantee future returns. While data on market performance can help you understand certain patterns, it is still important to be aware of the volatility of the market as a whole.
What is the average stock market return over 30 years?
Over the last 30 years (1995–2025), the S&P 500 — commonly used as a benchmark for the U.S. stock market — has delivered an average stock return rate of roughly 10.5% (from 1995–2025), including reinvested dividends, compared to an average of 12.2% in the last 10 (from 2015–2025).2 After adjusting for inflation, this comes out to approximately 6–7% in real returns.
The table below shows that while the market has a 30-year annual return average of about 10.5%, year-to-year returns can vary significantly. For example, the dot-com crash in the early 2000s, the financial crisis in 2008, and the post-pandemic surge reveal greater fluctuations, showing an example of how long-term averages may smooth out short-term volatility. While individual years may see losses or double-digit gains, multi-decade periods tend to produce more stable, positive returns. However, it is still important to note that short-term volatility can lead to major losses.
30-year periods tend to include multiple recessions and recoveries, yet historical data shows that diversified stock market investments still trend upward over time. Furthermore, reinvestment can help drive compounding, potentially allowing returns to build on themselves. Since there are no guarantees in the market, it is important to consider your investment risk tolerance and time horizon when deciding to invest in the stock market.
What affects stock market returns?
When analyzing average stock market returns, it may be worth noting that returns may be affected by a combination of different factors, including market cycles, economic changes, inflation, dividends, and more. Therefore, it is crucial to remember that past performance does not guarantee future returns.
Market cycles and economic growth
Stock market returns are heavily influenced by market cycles, which tend to alternate between bull markets (showing rising prices and investor optimism) and bear markets (falling prices and economic uncertainty). Market cycles may also influence investors to try to time the market and take more investment risks (like during bull markets) or make more conservative choices (bear markets). It is important to make decisions that align with your investment risk tolerance, regardless of the market cycle.
Rising gross domestic product (GDP), or economic growth, may also influence market outcomes. During periods of GDP growth, businesses tend to generate higher corporate profits, which may drive stock prices upwards. On the other hand, economic slowdowns often lead to lower earning expectations and declining market returns.
Inflation and interest rates
Inflation directly affects market returns by reducing your real return (essentially what you earn after adjusting for rising prices). Even if your portfolio shows growth, high inflation can potentially erode purchasing power. This is why actual annual returns may be slightly lower when adjusted for inflation.
Additionally, interest rate changes, which are largely driven by the Federal Reserve, may also influence market valuations, since they are often swayed with inflation. Rising rates typically make borrowing more expensive and can lower stock prices, making safer assets like bonds or certificates of deposit (CDs) more attractive alternatives.
Dividends and reinvestment
Dividends may also help boost long-term stock market returns. Historically, a substantial portion of total market gains has come from reinvested dividends rather than just price appreciation. When dividends are reinvested back into the market, they buy additional shares, which then generate their own dividends (e.g., using a dividend reinvestment plan) — creating a compounding effect that can help accelerate growth over time.
When planning your investment strategy, it may also be helpful to compare average stock market returns to those of lower-risk alternatives like certificates of deposit (CDs) or high-yield savings accounts.
Here is an overview of how they compare:
Product type | Stock market | Certificate of deposit (CD) | High-yield savings account |
Average return | Around 10% annually, actual returns may vary and are highly volatile | Average returns may vary based on interest environments. In recent years, fixed rates have ranged from 2 to 5% | Average returns may vary based on interest environments. In recent years, fixed rates have ranged from 2 to 4% |
Risk | High. Returns are not guaranteed and can fluctuate yearly. Principal is not protected | Very low. Fixed rates are guaranteed for the duration of the CD term. Eligible deposits protected under FDIC/NCUA insurance | Low. Interest rates may fluctuate based on market conditions. Eligible deposits protected under FDIC/NCUA insurance |
Liquidity | Varies depending on the stock/product, some are more liquid than others, but you may lose money if the market is down | Low liquidity. You typically face early withdrawal penalties for withdrawing before the CD matures | Very liquid. You can access your funds when needed, but some institutions may have monthly withdrawal limits |
Often used for | Long-term goals | Short- to medium-term goals | Short-term goals |
While CDs and high-yield savings accounts might produce lower returns, they provide principal protection and more predictable growth, which might make them appealing for conservative investors. Finding the right balance between growth potential and capital safety is crucial when planning your investment strategy.
How to plan your investments around average returns
Planning investments around average returns typically involves understanding what the market performance looks like over time and using that information to set realistic expectations to help build a long-term strategy. Here are some ways to help you approach it:
Understand what “average return” means: The average annual stock market return represents how the market has performed historically over many years, but actual returns may vary from year to year. This can help set a more realistic expectation, rather than predicting exact annual gains. However, past performance does not guarantee future returns.
Diversification strategies to help manage risk: Using historical averages can also help you design your asset allocation strategy. Balancing stocks and other investment products with lower-risk options like certificates of deposit (CDs) can help diversify your portfolio and spread risks.
Stay consistent: Staying consistent with your investments (such as through automatic savings or investments) can help enforce discipline and potentially drive compounding growth.
Factor in inflation and personal risk tolerance: You may also want to account for inflation when planning your strategy, since, for example, a 7% return might be closer to a net 4 or 5% return. Aiming for higher returns may mean increased volatility, so you might want to choose assets that match your risk tolerance. Balancing with lower-risk options like CDs or high-yield savings accounts can help spread risks.
Bottom line
Historically, the stock market has produced an average return of around 10% nominally and roughly 7% after inflation, but individual years can swing dramatically up or down. Long-term data shows that staying invested over multi-decade periods has historically produced positive results, especially when dividends are reinvested. Understanding these averages may help put return expectations into perspective.
If you’re looking for low-risk options to balance your portfolio, Raisin is here to help. The Raisin marketplace gives you access to a variety of high-yield savings products with competitive rates to help boost your savings. Explore account types, compare rates, and sign up today to start maximizing your savings potential!
FAQs on average stock market returns
What is the average stock market return over the last 10 years?
Over the past decade (2015–2025), the S&P 500 has averaged roughly 12.2% annually,2 though this figure may vary depending on start and end dates and whether dividends are reinvested.
Can you expect the stock market to return 10% every year?
No. 10% represents a long-term average, but actual yearly returns can range from double-digit gains to significant losses. The market rarely delivers exactly 10% in any single year.
How do dividends affect average stock market returns?
Dividends help make up a substantial portion of long-term returns. When reinvested, they purchase additional shares, which then generate their own dividends — creating a compounding effect that helps boost overall performance over time.
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