The S&P 5001 is one of the most widely recognized stock market indexes, and its performance is often used as an indicator of how well the overall stock market is doing. Understanding the S&P 500’s average returns could help you decide if you’d like your investments to mimic this index’s potential future performance.
What is the S&P 500 average return?
The S&P 500’s average annual return has been about 10% since its launch in 1957.2 (Here’s a refresher on the S&P 500 index.) As of December 2025, the average annual return stands at 11.5% for the past 40 years.3
What is the average stock market return?
The S&P 500 is one of the most well-known benchmarks for the stock market as a whole—many large, stable companies make up the S&P 500. When people refer to the average stock market return, they’re often talking about the S&P 500’s average—so the ballpark answer to this question is approximately 10%, based on all-time performance data.
Other proxies for the whole stock market are the Dow Jones Industrial Average (DJIA),4 which includes 30 large, well-established companies across many industries, and the Nasdaq Composite,5 which includes all common stocks that trade on the Nasdaq exchange. From January 2016 through December 2025, the DJIA has had an annualized return of 13.1%.6 During this same period, the Nasdaq Composite saw an annualized return of 17.7%.7
S&P 500 average returns by year
The S&P 500’s average return can vary, depending on the timeframe. Seeing these different S&P 500 returns by year can provide some perspective on short-term volatility and long-term performance. For example, even after plunging at the start of the COVID pandemic in March 2020, the S&P 500 gained 18.4% from January 2020 to December 2020.8
S&P 500 average 5-year return
The S&P 500 average 5-year return from January 2021 through December 2025 is 14.4%.9 That’s a bit higher than the roughly 10% average since the S&P 500’s inception, indicating the US stock market had a stronger-than-average 5-year stretch.
S&P 500 average 10-year return
The S&P 500 average 10-year return from January 2016 through December 2025 is slightly higher at 14.8%.10 That’s right in between the return of the DJIA and the Nasdaq Composite for that same time period. US stocks generally have seen above-average long-term returns since rebounding from the 2008 financial crisis. The past decade has been one of extended positive stock market growth—which is known as a long-term secular bull market. If the pattern continues, the S&P 500 could keep climbing into the 2030s, but history may not repeat.
S&P 500 average 20-year return
The S&P 500 average 20-year return from January 2006 through December 2025 is 11%.11 This stretch includes the 2007 housing crisis, which triggered the worst recession since the Great Depression. While many investors took a hit during this period, those who held on for the full 20 years likely fared well. This highlights the potential benefit of staying invested, even when emotions are running high.
S&P 500 average 30-year return
The S&P 500 average 30-year return from January 1996 through December 2025 is 10.4%,12 which is close to the historic average annual return of about 10%. This extended period includes the strong late-90s economy and the current bull market, as well as downturns like the dot-com bubble bursting and the financial crisis that followed. In other words, a mix of good and bad times contribute to the S&P 500’s average long-term gains.
How to invest for average stock market returns
If you’re hoping to invest in a way that tracks average S&P 500 returns, you’ll need an investment account, like a retirement account or taxable brokerage account. (Here’s how to open an investment account.) Then you have a few investment options.
Index funds
You can’t invest directly in indexes, but you could invest in index funds. These are mutual funds or exchange-traded funds (ETFs) (baskets of many stocks) that aim to track the performance of a certain index, such as the S&P 500. You would own shares of the index fund that owns shares of companies in the index. If the fund manager does a good job, the performance of the fund should be similar to the performance of the index. For instance, the Fidelity® 500 Index Fund (
For this service, investors pay a fee called an expense ratio. For example, the expense ratio on the Fidelity 500 Index Fund is 0.015%. That means on a $10,000 investment, the investor would pay $1.50 per year. The average expense ratio for asset-weighted passive US equity funds like the Fidelity 500 Index Fund, was 0.08% in 2024, according to Morningstar.13 Expense ratios vary from fund to fund, so before investing, check the cost, as well as the fund’s performance against the benchmark it’s seeking to track. Typically, index funds have lower expense ratios than actively managed funds.
Individual stocks
Another approach to try to get average stock market returns is to build an S&P 500 index portfolio yourself. That would save you from paying an expense ratio, but it would take a lot of work. It’s not enough to just buy all stocks in the S&P 500 one by one. You’d also need to calculate how much of each stock to hold in your portfolio to match its weighting in the index, since more valuable companies get more weighting. From there, you’d need to update your portfolio regularly to match the changes in the S&P 500. It’s generally not recommended to follow this strategy because of the amount of time and skill required. Instead, if you want this kind of granular control over your index investing, you might consider direct indexing.
Direct indexing
Direct indexing is an approach that allows for the opportunity to replicate an index by purchasing a representative selection of its underlying stocks. Instead of buying all of the stocks in the S&P 500, you would buy stocks across each of the 11 sectors in the index—allocated in proportions that mirror the index itself.
There are direct indexing services, like Fidelity’s Managed FidFolios that can handle this for you, buying stocks in an index and weighting them appropriately. Professionally managed direct indexing services offer automatic rebalancing as needed, which changes the makeup of the portfolio to keep it in line with the index. But unlike index funds or ETFs, you own the stocks directly. This gives you shareholder voting rights, including the ability to take part in proxy votes on important company matters.
Direct indexing could also offer tax advantages through techniques like tax loss harvesting.14 The investment manager can look for opportunities to sell stocks for a deductible loss to help offset taxable capital gains or other income. That can allow you the potential to approximate the index return with potential tax breaks, something investing in a pre-made index fund can’t do. But direct indexing could come with higher annual fees than investing in funds and require a larger minimum investment.