Understanding Long-Term S&P 500 Performance for Investors

I received my first stock investment in the 6th grade when my mom gifted me a single share of Disney. At the time, this included a free trip to Disneyland! 🎢

I’ve basically been invested in the stock market ever since, but it can feel unsettling at times, especially with recent headlines and the volatility.

When markets feel shaky, I find it helpful to ground myself in long-term data. Here are a few points about the S&P 500 over the last 50 years:

• 𝗟𝗼𝗻𝗴-𝗧𝗲𝗿𝗺 𝗔𝘃𝗲𝗿𝗮𝗴𝗲 𝗥𝗲𝘁𝘂𝗿𝗻: The S&P 500 has delivered an average annual return of over 9%, plus approximately 3.5% from dividends.
• 𝟭𝟬-𝗬𝗲𝗮𝗿 𝗣𝗲𝗿𝗳𝗼𝗿𝗺𝗮𝗻𝗰𝗲: The S&P 500 has delivered a positive 10-year CAGR in 44 of the last 50 rolling 10-year periods, excluding dividends. The worst performance over this period was a CAGR of -3%, for the 10 years ending in 2008.
• 𝗔𝗻𝗻𝘂𝗮𝗹 𝗣𝗲𝗿𝗳𝗼𝗿𝗺𝗮𝗻𝗰𝗲: The S&P 500 has produced a positive annual return in 38 of the last 50 years, excluding dividends. The worst performance over this period was an annual return of -38% in 2008

Together, these stats paint a compelling picture for long-term investors. If you hold for 10+ years, you’ll most likely come out ahead—or at least preserve your capital, barring any black swans. Factoring in inflation adds complexity, but the long-term takeaway remains largely the same.

Just make sure you’re mentally prepared for the down years, which is easier said than done.

Of course, this isn’t investment advice, and past performance is no guarantee of future results.


What if you don’t have 10+ years to wait? 🤔

For expenses in the next 3-5 years, like a car or kids’ college, I convert investments to cash or a short-term bond. Yes, it might mean settling for low returns in the near term, but that’s a trade-off I’m comfortable with.

For expenses 5–10 years out, the right mix depends on your risk tolerance, so this is a gray area.

Beyond time horizon, here are a few other ways I try to simplify things:

𝗪𝗵𝗮𝘁 𝗮𝗿𝗲 𝘆𝗼𝘂𝗿 𝗴𝗼𝗮𝗹𝘀? Financial advisors tend to ask about long-term financial and retirement goals, but I don’t usually have precise answers. As a result, I just try to balance savings with YOLO.

𝗛𝗼𝘄 𝗺𝘂𝗰𝗵 𝘁𝗼 𝗶𝗻𝘃𝗲𝘀𝘁? I’ve done a lot of research on personal asset allocation, and most recommendations boil down to some version of “110 or 120 minus your age” as a rough guide for the percentage to keep in risky assets. This may vary based on your risk profile, but it’s a good starting point.

𝗪𝗵𝗮𝘁 𝗮𝗯𝗼𝘂𝘁 𝗼𝘁𝗵𝗲𝗿 𝗿𝗲𝗴𝗶𝗼𝗻𝘀 𝗮𝗻𝗱 𝗮𝘀𝘀𝗲𝘁 𝗰𝗹𝗮𝘀𝘀𝗲𝘀? I invest in the S&P 500 but also in global index funds. I have also dabbled with many other asset classes, but I tend to have most of my risk assets with stocks, since I know this world the best.