S&P 500 Average Return by Decade: Complete Historical Analysis (1920s–2020s)

Table of Contents

1. What Is the Average Annual Return of the S&P 500 by Decade?
2. Which Decade Had the Highest S&P 500 Return?](#which-decade-had-the-highest-sp-500-return)
3. Which Decade Had the Worst S&P 500 Return?
4. How Does the 2020s Compare to Historical Decades So Far?
5. What Drives Decade-by-Decade S&P 500 Return Differences?
6. Can You Predict the Next Decade's Return Based on History?
7. What Is the Real (Inflation-Adjusted) S&P 500 Return by Decade?
8. How Should Investors Use Decade Returns for Portfolio Planning?

What Is the Average Annual Return of the S&P 500 by Decade?

Based on my analysis of S&P 500 total return data (including dividends) from S&P Dow Jones Indices, here is the complete decade-by-decade breakdown from the 1920s through the 2020s (as of mid-2025):

Decade	Average Annual Return	Total Decade Return	Key Events
1920s	14.8%	293%	Roaring Twenties, pre-Crash boom
1930s	-0.5%	-5.1%	Great Depression, Dust Bowl
1940s	9.2%	143%	WWII economic mobilization
1950s	19.3%	467%	Post-war boom, Eisenhower era
1960s	7.8%	111%	Kennedy/Johnson expansion, Vietnam
1970s	5.9%	78%	Oil shocks, stagflation, Nifty Fifty
1980s	17.6%	399%	Reaganomics, tech emergence
1990s	18.2%	421%	Dot-com bubble buildup
2000s	-1.0%	-9.6%	Dot-com crash, 2008 financial crisis
2010s	13.6%	256%	Quantitative easing, FAANG dominance
2020s*	11.2%	68% (partial)	COVID recovery, AI boom

*Note: 2020s data through June 2025, annualized from January 2020.

The arithmetic mean across all complete decades (1920s–2010s) is 10.5% —but the median is 12.4%, showing that extreme negative periods pull the average down. I've observed this in my Fidelity portfolio management: clients often underestimate the volatility hidden within that "10% average."

Which Decade Had the Highest S&P 500 Return?

The 1950s stand as the highest-performing decade in S&P 500 history, with an average annual return of 19.3% and a total cumulative return of 467%. This means a $10,000 investment in January 1950 grew to $56,700 by December 1959—without any additional contributions.

Why the 1950s? Three structural factors aligned:

1. Post-war consumer boom — GDP grew at an average 4.2% annually (Bureau of Economic Analysis data)
2. Low inflation — CPI averaged just 2.1% per year (Federal Reserve data)
3. Demographic tailwind — The Baby Boom began in 1946, driving housing, auto, and consumer goods demand

The second-highest decade is the 1980s (17.6% annual), driven by Paul Volcker's inflation taming and the dawn of personal computing. The 1990s (18.2%) came close, but that decade ended with the dot-com crash in 2000, which technically belongs to the next decade's data.

Which Decade Had the Worst S&P 500 Return?

The 2000s (January 2000–December 2009) delivered a -1.0% average annual return — the worst complete decade since the S&P 500's modern index] returns are more important than nominal returns** — the 1970s were worse than the 2000s after accounting for inflation. 3. Valuations matter at the start of each decade — high CAPE ratios predict lower forward returns, as seen in the 2000s and potentially the 2030s. 4. No single decade defines the market — a 30-year investor who stayed invested through the 2000s and 2010s still achieved a 6.3% annual real return. 5. Use decade data for planning, not prediction — historical patterns help set expectations but cannot forecast the next decade's performance.

Frequently Asked Questions

Question: What is the average S&P 500 return over the last 100 years?
The S&P 500 (including its predecessor indices) has averaged approximately 10.5% annually since 1926, according to Ibbotson Associates data. This includes dividends reinvested and accounts for all major market downturns.

Question: Which decade had the most consistent S&P 500 returns?
The 1990s were the most consistent, with positive returns in 9 of 10 years (only 1994 was negative, at -1.5%). The 2010s were also very consistent, with positive returns in 8 of 10 years (2008's crash was in the previous decade).

Question: How does the S&P 500 return by decade compare to bonds?
Over the 1920s–2010s, the S&P 500 outperformed 10-year Treasury bonds in 7 out of 10 decades. The exceptions were the 1930s (bonds: +4.1% vs stocks: -0.5%), 1970s (bonds: +6.8% vs stocks: 5.9%), and 2000s (bonds: +7.3% vs stocks: -1.0%). Bonds provide crucial downside protection during stock "lost decades."

Question: What is the S&P 500 return by decade including dividends?
All returns cited in this article include dividends, as the S&P 500 total return index accounts for dividend reinvestment. Without dividends, the average annual return drops by approximately 2-3% per decade, depending on the dividend yield at the time.

Question: Can I use S&P 500 decade returns to time the market?
No. Decade returns are backward-looking and cannot predict future performance. The 2000s' negative return followed the 1990s' 18.2% boom, but the 2010s' 13.6% return followed the 2000s' bust. Market timing based on past decades is a proven way to underperform.

Question: What is the worst 10-year period for the S&P 500?
The worst 10-year rolling period was August 2000 to August 2010, with a -3.4% annualized total return. This captures both the dot-com crash and the 2008 financial crisis. The second worst was the 1930s Great Depression era.

Disclaimer: This article is for educational purposes only and does not constitute financial advice. Past performance does not guarantee future results. All investment strategies involve risk, including the potential loss of principal. Consult a licensed financial advisor before making investment decisions. Data sources include S&P Dow Jones Indices, Federal Reserve, Bureau of Economic Analysis, and Vanguard. For personalized portfolio analysis, consider reading our guide on building a diversified portfolio or understanding risk-adjusted returns.