Will future returns match the past?

Probably lower. Vanguard and BlackRock both publish 10-year expected returns currently in the 4.5–6% real range, citing high valuations. Plan conservatively at 5% real; treat anything above as upside.

What about total return vs price return?

The 7% real figure is total return, dividends reinvested. The price-only chart you see on Yahoo Finance excludes dividends and understates true performance by about 2 percentage points per year.

Should I invest in only the S&P 500?

It's defensible, but a total-world index (VT) adds international diversification at a similar cost and historically reduces drawdowns. Most academics recommend at least 20–30% international allocation.

Answer · Investing

What return can I expect from the S&P 500?

By Yinka Olayokun Published May 12, 2026 Reviewed May 12, 2026

Direct Answer

Since 1928, the S&P 500 has averaged roughly 9.8% nominal return and 6.8% real (inflation-adjusted) return per year, with dividends reinvested. That's the number to use for retirement planning. One-year returns can swing from -37% to +52% and tell you almost nothing about the long run.

S&P 500 returns by horizon (1928–2025, with dividends)

Horizon	Average nominal	Average real	Worst stretch
1 year	+10%	+7%	-37% (2008)
10 years	+10.5%/yr	+7%/yr	-1%/yr (1999–2008)
20 years	+10%/yr	+7%/yr	+3%/yr
30 years	+10%/yr	+7%/yr	+5%/yr

Nominal vs real, the only distinction that matters

Nominal returns are what you see on a brokerage statement. Real returns subtract inflation, which is what determines whether your money buys more in the future. Use 7% real (or 9–10% nominal with separate inflation modeling) for any retirement projection. Anything higher is marketing.

Why short-term returns mislead

Across 1-year windows since 1928, the market is down 25% of the time. Across 10-year windows, down 6% of the time. Across 20-year windows, down 0% of the time (worst was +3%/yr from 1929–1949). Planning horizon, not market behaviour, controls risk.

Frequently Asked Questions

Will future returns match the past?: Probably lower. Vanguard and BlackRock both publish 10-year expected returns currently in the 4.5–6% real range, citing high valuations. Plan conservatively at 5% real; treat anything above as upside.
What about total return vs price return?: The 7% real figure is total return, dividends reinvested. The price-only chart you see on Yahoo Finance excludes dividends and understates true performance by about 2 percentage points per year.
Should I invest in only the S&P 500?: It's defensible, but a total-world index (VT) adds international diversification at a similar cost and historically reduces drawdowns. Most academics recommend at least 20–30% international allocation.

Sources

Historical returns on stocks, bonds and bills: 1928–present , NYU Stern (Aswath Damodaran). Verified April 30, 2026.

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