What Is the S&P 500’s Average Return? Definition and Example
The S&P 500’s long-run average annual return, before and after inflation, decade by decade, with sources and the traps in the word “average”.
Key takeaways
- The S&P 500 index returned about 10.0% a year from 1928 to 2025 with dividends reinvested (compound average, Damodaran data), or roughly 6.8% a year after inflation.
- The simple (arithmetic) average of yearly returns over the same period is higher, about 11.9%, because losses compound against you.
- Decades vary widely: about −1% a year in the 2000s, about 18% in the 1990s.
- Over the 10 years to Sep 30, 2026, the SPDR S&P 500 ETF (SPY) returned 15.2% a year in Exent’s data, well above the long-run average.
What is the S&P 500’s average annual return?
Using the annual total returns compiled by NYU Stern professor Aswath Damodaran, the S&P 500 (and its predecessor index before 1957) compounded at about 10.0% a year from 1928 through 2025, including dividends. Adjusted for inflation with annual-average CPI from the Minneapolis Fed, that is roughly 6.8% a year (our calculation; an approximation).
S&P 500 returns by decade
| Decade | Nominal, per year | Inflation, per year | Real, per year |
|---|---|---|---|
| 1930s | −0.9% | −2.1% | 1.2% |
| 1940s | 8.5% | 5.5% | 2.8% |
| 1950s | 19.5% | 2.1% | 17.0% |
| 1960s | 7.7% | 2.3% | 5.3% |
| 1970s | 5.9% | 7.1% | −1.1% |
| 1980s | 17.3% | 5.5% | 11.2% |
| 1990s | 18.0% | 3.0% | 14.6% |
| 2000s | −1.0% | 2.6% | −3.4% |
| 2010s | 13.4% | 1.8% | 11.5% |
| 2020–2025 | 14.9% | 3.9% | 10.6% |
Compound annual returns with dividends, computed from Damodaran’s annual data; inflation from annual-average CPI. Past returns, not a forecast. For year-by-year figures see S&P 500 annual returns.
Why are there two different averages?
The arithmetic average adds up yearly returns and divides by the number of years: about 11.9% for 1928–2025. The geometric average, or CAGR, is what your money actually compounded at: about 10.0%. Illustrative: +50% then −50% averages 0%, but $100 becomes $75. The gap is volatility drag.
Why it matters for a self-directed investor
The long-run average is the right yardstick for planning, and recent years are not. SPY’s 15.2% a year over the decade to Sep 30, 2026 (see the SPY page) is well above the century-long figure. When judging your own results, compare with a benchmark at your level of risk; what is a good annual return? covers how.
Common mistakes
- Quoting the price-only index: it leaves out dividends, a large part of long-run return.
- Using the arithmetic average to project wealth: it overstates compounding.
- Ignoring inflation: real returns are what buy things.
- Assuming the next decade will look like the last one.
Frequently asked questions
In Exent’s data, the SPDR S&P 500 ETF (SPY) returned 15.2% a year over the 10 years to September 30, 2026, including dividends.
Roughly 6.8% a year from 1928 to 2025, by our calculation from Damodaran’s total returns and annual-average CPI.
The figures here do. Total return with dividends reinvested is the fair measure; the price index alone understates what investors earned.
By real compound return, the 2000s were the weakest in this table, at about −3.4% a year after inflation. The 1970s were also negative after inflation.
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Educational content, not investment advice. Examples are illustrative; past performance does not guarantee future results.