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%.
For the 10 years ending in December 2024, the S&P 500 has outpaced the historical average a bit, returning an annual average of 13.3% with dividends. This is similar to the 12.55% return of the Russell 3000 index, which represents almost the entire US equity market.
While the 10-year return expectation for US stocks is just 5.6%, it's 9.6% for non-US developed-markets stocks and 11% for emerging-markets equities.
S&P 500 Investment Time Machine
Imagine you put $1,000 into either fund 10 years ago. You'd be up to roughly 126.4% — or $3,282 — from VOO and 126.9% — or $3,302 — from SPY. That's not exactly wealthy, but it shows how you can more than triple your money by holding an asset with relatively low long-term risk.
$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.
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.
U.S. large cap equities are expected to deliver annualized returns of 6% over the next decade, while international developed market equities are projected to slightly outperform at 7.1%. This edge comes from more attractive valuations, even as U.S. equities benefit from stronger earnings growth.
A good return on investment is generally considered to be around 7% per year, based on the average historic return of the S&P 500 index, adjusted for inflation. The average return of the U.S. stock market is around 10% per year, adjusted for inflation, dating back to the late 1920s.
The U.S. stock market generally did well in 2024 and may continue strong in 2025. However, we expect to see gear shifts and increased market volatility as potential policies from the incoming Trump administration combine with uncertainty about inflation and global economic strength.
While the term good is subjective, many professionals consider a good ROI to be 10.5% or greater for investments in stocks. This number is the standard because it's the average return of the S&P 500 , an index that serves as a benchmark of the overall performance of the U.S. stock market.
Many retirement planners suggest the typical 401(k) portfolio generates an average annual return of 5% to 8% based on market conditions.
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).
In a recent report, Goldman Sachs predicted that the index would achieve an annualized total return of 3% over the next 10 years. Over a decade, that equals a return of just 34%, which would rank in the 7th percentile of 10-year returns since 1930. By contrast, the S&P 500 has jumped 38% over just the last year.
Dividend-paying Stocks
Shares of public companies that split profits with shareholders by paying cash dividends yield between 2% and 6% a year. With that in mind, putting $250,000 into low-yielding dividend stocks or $83,333 into high-yielding shares will get you $500 a month.
A $100,000 salary can yield a monthly income of $8,333.33, a biweekly paycheck of $3,846.15, a weekly income of $1,923.08, and a daily income of $384.62 based on 260 working days per year.
Let's say you want to become a millionaire in five years. If you're starting from scratch, online millionaire calculators (which return a variety of results given the same inputs) estimate that you'll need to save anywhere from $13,000 to $15,500 a month and invest it wisely enough to earn an average of 10% a year.