Deconstructing 10, 20 & 30 Year Stock Market Returns - A Wealth of Common Sense (2024)

Posted by Ben Carlson

A reader asks:

I’ve just come across your blog post from 2016, “Deconstructing 30-Year Stock Market Returns.” Thank you for that! It was just about exactly what I was looking for. I wonder if you have updated your finding since then? Also, have you run the analysis for other time periods? 10-year and 20-year rolling averages would also be interesting.

When Matthew McConaughey was on his book tour he told Jimmy Fallon one of the reasons he writes on a regular basis is to forget.

"I write things down to forget."

-@McConaughey explains the value of journaling and how it helped him write “Greenlights.” #FallonTonight pic.twitter.com/GIYzNNmMRK

— The Tonight Show (@FallonTonight) December 15, 2021

I’ve been writing regularly for a long time now too and I definitely forgot about this one. In that post I looked at the rolling 30 year annual returns for the U.S. stock market.

One of my favorite topics to write about is long run returns so we might as well update some numbers to see how things look.

Here are the rolling 10 year returns going all the way back to 1926:

Deconstructing 10, 20 & 30 Year Stock Market Returns - A Wealth of Common Sense (1)

Even over decade-long time frames, there was plenty of volatility in returns.

The best 10 year annual return was 21.4% for the period ending towards the tail-end of 1959. That’s a total return of roughly 600%. As Mr. McConaughhey would say — alright, alright, alright.

The worst 10 year annual return was a loss of almost 5% per year ending in the summer of 1939. That was bad enough for a 10 year total return of -40%. The 1930s were a little rough.

The only other time the market experienced negative returns over 10 years was starting with the bursting of the dot-com at the start of the 2000s followed by the Great Financial Crisis hitting towards the end of that decade.

Over rolling 20 year periods we see the down returns make an exit but still plenty of variation:

Deconstructing 10, 20 & 30 Year Stock Market Returns - A Wealth of Common Sense (2)

The best 20 year annual return was more than 18% per year from the early-1980s through the spring of 2000 at the aforementioned dot-com bubble peak.

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. Annual returns were 8% or more in 75% of all rolling 20 year observations. They were 10% or higher 56% of the time.

Now for one of my favorite long-run charts — rolling 30 year annual returns:

Deconstructing 10, 20 & 30 Year Stock Market Returns - A Wealth of Common Sense (3)

The lowest annual return over any 30 year period going back to 1926 was 7.8%. That’s what you got had you invested at the peak of the Roaring 20s boom in September 1929. You would have lost more than 80% of your investment in the ensuing crash and still made more than 850% in total over 30 years.

Allow me to repeat that stat for the people in the back — the worst 30 year return over the past 100 years or so was a total gain of 850%.1

The best 30 year annual return was 14.8% in the 30 years ending in 1968. This makes sense considering you would have been invested in 1939 following the worst 10 year stretch in history.

The most recent 10 year annual gain through January 2023 was 12.7%. The previous 20 years were up 10.3% per year. And the past 30 years were up 9.8% per year.

The most recent 30 year period since 1993 includes:

The Asian currency crisis, the dot-com crash, 9/11, the Iraq/Afghanistan wars, the Great Financial Crisis, the biggest global pandemic since 1918, the war in Ukraine and 9% inflation not to mention flash crashes, a few recessions, government shutdowns, trade wars, an insurrection, multiple impeachment hearings, 4 legitimate bear market crashes, 9 other stock market corrections and a whole bunch of other crazy and/or bad things I can’t think of right now.

I don’t know if we can have a repeat performance over the next 30 or 100 years.

Here’s what I wrote in my original blog post back in 2016:

We are promised nothing as investors in terms of future returns. Things could certainly be worse from this point forward. You just never know.

Still, it’s hard to look at these numbers and not be optimistic about the future. Bad things happen and human progress continues to march on.

I still believe this to be true.

Bet against human progress at your own peril.

We talked about this question on the latest edition of Portfolio Rescue:

Bill Sweet joined me once again to discuss bonds, Roth IRAs, RMDs, tax policy BBQ ribs and much more.

Further Reading:
Deconstructing 30 Year Stock Market Returns

1The usual caveats apply here — no taxes, fees, inflation or transaction expenses. Still.

Now go talk about it.

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Deconstructing 10, 20 & 30 Year Stock Market Returns - A Wealth of Common Sense (2024)

FAQs

What is the average stock market return over 30 years? ›

Average Stock Market Returns Per Year
Years Averaged (as of end of February 2024)Stock Market Average Return per Year (Dividends Reinvested)Average Return with Dividends Reinvested & Inflation Adjusted
30 Years10.222%7.495%
20 Years9.74%6.96%
10 Years12.681%9.555%
5 Years14.543%9.879%
3 more rows
Mar 28, 2024

What is the rolling 30 year return of the stock market? ›

The most recent 10 year annual gain through January 2023 was 12.7%. The previous 20 years were up 10.3% per year. And the past 30 years were up 9.8% per year.

What is the average 10 year return of the stock market? ›

5-year, 10-year, 20-year and 30-year S&P 500 returns
Period (start-of-year to end-of-2023)Average annual S&P 500 return
10 years (2014-2023)11.02%
15 years (2009-2023)12.63%
20 years (2004-2023)9.00%
25 years (1999-2023)7.18%
2 more rows
Mar 5, 2024

What is the return of the stock market over 20 years? ›

The S&P 500 returned 345% over the last two decades, compounding at 7.7% annually. But with dividends reinvested, the S&P 500 delivered a total return of 546% over the same period, compounding at 9.8% annually. Investors can get direct, inexpensive exposure to the index with a fund like the Vanguard S&P 500 ETF.

What is the safest investment with the highest return? ›

Here are the best low-risk investments in April 2024:
  • High-yield savings accounts.
  • Money market funds.
  • Short-term certificates of deposit.
  • Series I savings bonds.
  • Treasury bills, notes, bonds and TIPS.
  • Corporate bonds.
  • Dividend-paying stocks.
  • Preferred stocks.
Apr 1, 2024

What is the average return on stocks over 40 years? ›

40 Years (1982 – 2022): 11.6% annual return. 30 Years (1992 – 2022): 9.64% annual return. 20 Years (2002 – 2022): 8.14% annual return. 10 Years (2012 – 2022): 12.74% annual return.

What is the best performing stock in the last 30 years? ›

The best-performing stock of the past three decades is not one of the tech titans you'd assume. It's actually an energy drink company: Monster Beverage . Monster's stock has climbed for decades, along with sales, which have grown consistently for 31 years straight.

How much should a 30 year old have in the stock market? ›

The old rule about the best portfolio balance by age is that you should hold the percentage of stocks in your portfolio that is equal to 100 minus your age. So a 30-year-old investor should hold 70% of their portfolio in stocks. This should change as the investor gets older.

What is the average stock market return over 60 years? ›

Stock market returns between 1960 and 2023

This is a return on investment of 47,073.47%, or 10.15% per year.

What will 100k be worth in 20 years? ›

If you invest $100,000 at an annual interest rate of 6%, at the end of 20 years, your initial investment will amount to a total of $320,714, putting your interest earned over the two decades at $220,714.

How much money do I need to invest to make $3,000 a month? ›

Imagine you wish to amass $3000 monthly from your investments, amounting to $36,000 annually. If you park your funds in a savings account offering a 2% annual interest rate, you'd need to inject roughly $1.8 million into the account.

What is the average annual return if someone invested 100% in stocks? ›

Historically, the average annual return for stocks has been around 8-10%. The range of potential annual returns for a portfolio with 10% bonds and 90% stocks would likely be wider than a portfolio with 10% stocks and 90% bonds.

What's the biggest stock market drop in history? ›

The 1987 stock market crash, or Black Monday, is known for being the largest single-day percentage decline in U.S. stock market history. On Oct. 19, the Dow fell 22.6 percent, a shocking drop of 508 points. The crash was somewhat of an isolated incident and didn't have anywhere near the impact that the 1929 crash did.

What is the average return on a 401k? ›

Many retirement planners suggest the typical 401(k) portfolio generates an average annual return of 5% to 8% based on market conditions. But your 401(k) return depends on different factors like your contributions, investment selection and fees. Sometimes broader trends can overwhelm these factors.

What is a good rate of return over 30 years? ›

Looking at the S&P 500 for the years 1993 to mid-2023, the average stock market return for the last 30 years is 9.90% (7.22% when adjusted for inflation).

What is the average market return for the last 50 years? ›

History tells us that the stock market has increased more years than it has fallen. This is a basic truth that is helpful for those who are beginning to invest; it's also what leads us to that long-term return of an annualized historical average return of 7%. The S&P 500 has gained in 40 of the last 50 years.

What is the average return on real estate last 30 years? ›

Returns. As mentioned above, stocks generally perform better than real estate, with the S&P 500 providing an 8% return over the last 30 years compared with a 5.4% return in the housing market. Still, real estate investors could see additional rental income and tax benefits, which push their earnings higher.

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