The S&P 500 lost decade - 2000 to 2010
During this decade, S&P 500 investors had to deal with two market downturns - the aftermath of the .com bubble and the Global Financial Crisis (GFC). This led to the S&P 500 having a negative return over the decade (01/01/2000 - 31/12/2009).
There are two general periods where stocks realized a negative return over a 10-year span: one during the Great Depression in the 1930s and the other during the Great Recession in 2008.
The 1929 crash lasted until 1932, resulting in the Great Depression, a time in which stocks lost nearly 90% of their value.
Based on total return, the average stock market return is about 13% over the past 10 years. Since 1965, the S&P 500 has provided annualized total returns of 10.2% through 2023, according to data compiled by Berkshire Hathaway (BRKB).
$3,000 X 12 months = $36,000 per year. $36,000 / 6% dividend yield = $600,000. On the other hand, if you're more risk-averse and prefer a portfolio yielding 2%, you'd need to invest $1.8 million to reach the $3,000 per month target: $3,000 X 12 months = $36,000 per year.
Stock Market Average Yearly Return for the Last 10 Years
The historical average yearly return of the S&P 500 is 13.316% over the last 10 years, as of the end of December 2024. This assumes dividends are reinvested. Adjusted for inflation, the 10-year average stock market return (including dividends) is 10.021%.
The most extreme example of the last 100 years was the crash of the 1930s, which took 25 years to get back to its previous high. The S&P 500 took almost six years to fully recover from the crashes of 2000 (the dot-com bubble) and 2008 (the global financial crisis).
Market Expert Ruchir Sharma says that the stock market's momentum looks likely to sputter in 2025 and that it could falter as investors grow wary of the US's mounting debt problems.
On 17 May 2004, the BSE fell 15.52% – its largest fall in history (in terms of percentage).
The slide continued through the summer of 1932, when the Dow closed at 41.22, its lowest value of the twentieth century, 89 percent below its peak. The Dow did not return to its pre-crash heights until November 1954. The financial boom occurred during an era of optimism. Families prospered.
Stocks: As represented by the S&P 500 Index, stocks have climbed about 10% a year for the last 50 years, doubling just about every seven.
The worst 20 year return was a gain of less than 2% ending in 1949. This makes sense when you consider that period included the Great Depression and World War II. One of the neat things about the distribution of returns over 20 years is almost 90% of the time annual returns were 7% or higher.
In general, though, the longer you stay in the market, the less likely you are to lose money. If you were to invest in an S&P 500 index fund and hold it for just one year, there's a 27% chance you'd see negative total returns, according to historical data calculated by investment firm Capital Group.
The old adage, “it's not about timing the market, but about time in the market,” has been proven true over the years. Research shows that those who stay invested over the long run in a well-diversified portfolio will generally do better than those who try to profit from turning points in the market.
An impressive return on investment (ROI) after five years typically means gains that significantly outpace inflation and other common benchmarks. For stocks, this might be around 10-15% per year. For more conservative investments, anything above 6-8% annually is considered strong.
In particular, consider the remarkable gains in the S&P 500 Index, which was on track to close up more than 25% for 2024, well ahead of Wall Street analysts' forecasts, in one of its strongest annual performances of the last quarter-century.
September 30, 2008: President George W. Bush addressed the country, saying "Congress must act. ... Our economy is depending on decisive action from the government.
A 2024 recession is generally seen as unlikely, but metrics that economics take seriously hint that a recession could occur, perhaps in 2025.
The Great Depression of 1929–39
This was the worst financial and economic disaster of the 20th century. Many believe that the Great Depression was triggered by the Wall Street crash of 1929 and later exacerbated by the poor policy decisions of the U.S. government.
Invest in Dividend Stocks
Last but certainly not least, a stock portfolio focused on dividends can generate $1,000 per month or more in perpetual passive income. However, at an example 4% dividend yield, you would need a portfolio worth $300,000, which is a substantial upfront investment.
Variable Rate of Return: Financial advisors often project an average rate of return for 401(k) plans between 5 to 8% over 20 to 30 years. However, this does not guarantee such returns due to market volatility and other factors.