U.S. Stock Market: Real Total Returns

A description of historical, inflation adjusted total returns for 1 year, 10 year, 20 year, and 30 year investments in the U.S. stock market as represented by the S&P 500 index using a number of relevant new charts.

The S&P 500 index is a reasonable representation or change in overall U.S. stock market prices over time. When adjusted for inflation (aka "real"), as in the following chart, it is a reasonable representation of the change in overall U.S. stock market value over time:

The previous charts shows the inflation-adjusted price changes for the S&P 500 index. However, stock shareholders receive significant value from the dividends paid by most companies. The value of these dividends is not reflected in the previous chart. In the next chart, the index price has been adjusted upward each month so that it reflects the value of any dividends.

Total return in the stock market is change in stock price plus dividends. Real total return is adjusted for inflation and can be calculated from the change in real total return price in the previous chart.

The next four charts show, for every month, the real (inflation adjusted) total return on an investment in an S&P 500 index fund starting 1 year, 10 years, 20 years, or 30 years prior. These charts are useful for determining how often an investment of the specified length would have produced a total return gain vs. a loss over the last century or so.

The next chart illustrates that annual total return gains are more frequent than annual total return losses, but also that annual total return losses are not uncommon.

The next chart shows that for a 10 year investment, capital gains have been significantly more common than capital losses.

The next chart shows that there has only been a single brief instance in the last century or so (1921) where a 20 year investment has produced a small total return loss.

The next chart shows that for the window covered by this data, there has never been a 30 year investment in the S&P 500 that has produced a total return loss.

It is worth noting (see 11/09/20 Post - U.S. Stock Market: Real Capital Gains) that dividends played a deciding role in avoiding 20 and 30 year investment losses, and that dividend yields have fallen greatly over the last century:

See Topic - U.S. Stock Market for other related charts and commentary.