The past decade has been great for stocks. From 2022 through 2022, the boilerplate stock market return was 14.8% annually for the Due south&P 500 index (SNPINDEX:^GSPC). The returns can -- and do -- vary wildly from one year to the side by side, and an "average" year nigh never actually generates the average render.

Over that decade, just one year, 2022, was shut to the 14.8% boilerplate annualized return. The grab? Nobody knows which years volition be above or below average. This is where the one-year boilerplate is helpful only in setting the stage for stocks as good long-terminvestments.

Infographic of stock market facts including variation, buy and hold strategy and the average return.

Image source: The Motley Fool.

Boilerplate stock marketplace returns

In general, when people say "the stock market," they mean the Due south&P 500 index. The Due south&P 500 is a collection -- referred to as a stock market index -- of just over 500 of the largest publicly traded U.S. companies. (The list is updated every quarter with major changes annually.) While there are thousands more stocks trading on U.S. stock exchanges, the Due south&P 500 comprises about fourscore% of the entire stock market value on its ain, making it a useful proxy for the performance of the stock marketplace equally a whole.

The market'southward results from one year to the next can vary significantly from the average. Allow'south employ the 2022-2021 period as an example:

  • Downwards 4.4%: 1 year
  • Upward ii% or less: 1 twelvemonth
  • Up more than 20%: 4 years
  • Upwardly betwixt 12% and 19%: iv years

To put it another way, 6 of those 10 years resulted in outcomes that were very different from the 14.eight% annualized average return over that decade. Of those six very different years, two generated significantly lower returns (with i twelvemonth, 2022, resulting in losses), while four years delivered substantially higherreturns. Two of those years -- 2022 and 2022 -- generated returns of more than thirty%, helping to brand up for the years that saw beneath-average returns.

ten-year, xxx-yr, and 50-year average stock market returns

Allow's take a look at the stock market's average annualized returns over the by 10, 30, and 50 years, using the S&P 500 equally our proxy for the market.

 Menstruation

Annualized Return (Nominal)

Annualized Real Render (Adjusted for Inflation)

$1 Becomes... (Nominal)

$1 Becomes... (Adapted for Inflation)

10 years (2012-2021)

fourteen.8%

12.4%

$3.79

$3.06

30 years (1992-2021)

9.9%

7.3%

$xi.43

$5.65

50 years (1972-2021)

9.four%

5.iv%

$46.69

$six.88

Data source: MoneyChimp.

It's worth highlighting the variance in annual returns from ane year to the side by side versus the boilerplate. Since 1972, here is a breakdown of the yearly results:

  • Returns of 20% or more: 19 years
  • Returns between ten% and 20%: 13 years
  • Returns betwixt 0% and x%: ix years
  • Losses betwixt 0% and 10%: four years
  • Losses between 10% and xx%: two years
  • Losses of more 20%: iii years

Stock market returns vs. aggrandizement

In improver to showing the average returns, the table above also shows useful information on stock returns adapted for inflation. For example, $1 invested in 1972 would be worth $46.69 today.

But, in spending ability, $46 isn't worth what information technology would accept been in 1972. Adjusting for inflation, that $46 will buy the same amount of goods or services you would have been able to buy with $6.88 in 1972.

Buy-and-hold investing

If in that location'southward any i lesson we tin have from the breakdown of annual results versus the boilerplate, information technology'southward that investors are far more likely to earn the all-time returns past investing for the long term. There'southward simply no reliably accurate style to predict which years volition exist the good years and which years will underperform or even pb to losses.

But nosotros exercise know that, historically, the stock market has gone up more years than it has gone down. The S&P 500 gained value in 40 of the past 50 years, generating an average annualized return of 9.4%. Despite that, but a handful of years actually came inside a few pct points of the actual average. Far more years significantly either underperformed or outperformed the boilerplate than were close to the average.

What'southward a person to do? Buy loftier-quality stocks, ideally regularly across every market condition, and hold those investments for many years. The evidence is overwhelming that investors who try to trade their fashion to college returns with short-term moves or buy and sell based on projections of short-term peaks and bottoms mostly earn beneath-average returns. Moreover, those strategies crave essentially more than time and effort. They can also result in higher fees and taxes that further reduce gains.

If y'all're looking to build wealth, investing in stocks is an splendid place to offset. But to get the best returns in stock investing, utilize the method that'southward tried and true: Purchase great stocks and hold them for every bit long as possible.