Monday , 6 December 2021

Average Returns Of S&P 500 Over the Years – How Does Your Performance Compare?

The chart below compares the S&P 500’s annualized returns over the last one, two, five, ten, and twenty years to the average annualized returns of the index for each time period since 1928.

  • The S&P’s current 1-year return is already well above its historical average of 11.7%, and barring a major decline in December, this number will be even more skewed a month from now…
  • Both the 2- and 5-year annualized returns are pretty much in line with the historical averages…
  • Over the last 10 years, the S&P 500’s average annualized return of 13.4% is a full three percentage points higher than average. That may not sound like an enormous difference, but over time it adds up;
    • 13.4% compounded over 10 years works out to a cumulative gain of 252% whereas 10.4% compounds to just 169%…
  • Returns over the last 20 years have been well below average at 6.2% vs 11.0%. A three percentage point difference adds up over 10 years, but a spread of five percentage points over a 20-year period is enormous.
    • While one could expect to multiply their original investment by seven times if it compounded at 11% annually over a 20-year period, that same investment wouldn’t even multiply by 2.5 times at a rate of 6.2%!

The chart below ranks the S&P 500’s current 1-, 2-, 5-, 10-, and 20-year returns on a percentile basis versus all other periods.

  • the S&P 500’s current 1-year performance only ranks in the 58th percentile relative to all other 12-month periods,
  • the 2- and 5-year returns are both slightly below the 50th percentile…
  • the 20-year performance ranks in just the 5th percentile of all other 20-year periods in the index’s history. As good as the last decade has been for bulls, the decade before was truly treacherous.
Editor’s Note:  The above excerpts from the original article by the Bespoke investment Group have been edited ([ ]) and abridged (…) for the sake of clarity and brevity.  The author’s views and conclusions are unaltered and no personal comments have been included to maintain the integrity of the original article.  Furthermore, the views, conclusions and any recommendations offered in this article are not to be construed as an endorsement of such by the editor. Also note that this complete paragraph must be included in any re-posting to avoid copyright infringement.