What is the average stock market return?
The average stock market return is about 10% per year, as measured by the S&P 500 index. However, that average rate is reduced by inflation — investors can expect to lose 2% to 3% of their purchasing power every year.
Investing in the stock market is most effective when you utilize long-term investments — money you don't need for at least five years. For shorter time frames, you'll want to stick to lower-risk options (such as a high-yield online savings account) and you'd expect to earn a lower return in exchange for that safety.
» Ready to get started? Here's how to invest in stocks
The average stock market return isn't always average
While 10% might be the average, the returns in any given year are far from average. In fact, between 1926 and 2025, returns fell within the “average” band of 8% to 12% only eight times. The rest of the time, they were much lower or, usually, much higher.
But even when the market is volatile, returns tend to be positive in a given year. Of course, it doesn’t always rise — but in the years the stock market has been around, it has produced positive returns in 70% of them.
Historical S&P 500 returns
Below is a table showing the S&P 500's price returns over different timeframes, as of the end of 2025.
Period (start-of-year to end-of-2025) | Average annual S&P 500 return |
|---|---|
5 years | 14.28% |
10 years | 13.92% |
15 years | 12.86% |
20 years | 10.39% |
30 years | 9.90% |
Source: macrotrends.net | |
The table shows that while the market has a long-term average annual return of 10%, year-to-year returns can vary significantly. The five-year return factors in the post-pandemic surge and the 2023 recovery. The 20-year return includes the Great Recession, and the 30-year return includes the dot-com crash of the early 2000s.
» Intrigued? Learn how to invest in the S&P 500
Brokerage firms | |
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What to expect from the average stock market return
There are no guarantees in the market, but this 10% average has held remarkably steady for a long time. So what kind of return can investors reasonably expect today from the stock market?
The answer to that depends largely on what has happened in the recent past. But here’s a simple rule of thumb: The higher the recent returns, the lower the future returns, and vice versa.
Generally speaking, when estimating the return on your stock-market investment over time, we suggest using an average annual return of 6% and recognizing that you'll experience both down years and up years. You can use NerdWallet's investment calculator to see what 6% growth looks like based on how much you're planning to invest.
Here are three key takeaways if you’re looking to make money in the stock market.
1. Temper your enthusiasm during good times. Congratulations, you’re making money. However, when stocks are running high, remember that the future is likely to be less good than the past. It seems investors have to relearn this lesson during every bull market cycle.
2. Become more optimistic when things look bad. A down market should cause you to celebrate: You can buy stocks when they're essentially on sale and anticipate higher future returns.
3. You get the average return only if you buy and hold. If you trade in and out of the market frequently, you can expect to earn less, sometimes much less. Commissions and taxes eat up your returns, while poorly timed trades erode your bankroll. Study after study shows that it’s almost impossible for even investing professionals to beat the market. It's good to rebalance your portfolio occasionally. That means selling off a little bit of the investments that have gained more than expected, and buying a little bit of the ones that have underperformed in order to bring the portfolio back to its target composition. But other than a little bit of rebalancing, try to touch your investments as little as possible.
Over time, even a few percentage points can make the difference between retiring with a tidy nest egg and continuing to drudge away in your golden years.
» Start small: How to invest $500
Ready to get started?
If the market’s long-term return sounds attractive to you, it’s easy to get started. You’ll first need to open a brokerage account, which allows you to buy and sell stock market investments.
» Need a little help? Check out our list of the best online brokers
