Average Stock Market Return

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Historically, the average stock market return has been roughly 10%, before inflation, annually, from the S&P 500 inception in 1926 to 2020. However, returns each year are far from the average, and the 10% average stock market return rarely happens in a one-year performance.

Be aware that the 10% growth is before expected inflation of 2%-3% per year. The actual average stock market return to 7%-8% after adjusting for inflation. We will talk about inflation later on.

The shorter your timeframe, the greater the market volatility investors will face. Daily, prices can gyrate wildly with 24-hour financial news chatter you should ignore.

The Stock Market Fluctuates

Measuring Stock Market Returns And Why S&P 500 Matters

A securities market index is an indicator of market performance, measuring the average value of several securities chosen as a sample to reflect how the market is doing.

Take A Long Term View of The Market

The market can be volatile daily due to short-term events, government closing, market sentiment changes, speeches byFed members, economic changes, and temporary news.

Bull Markets, Bear Markets, And Market Corrections

Stock market corrections are declines of at least 10% and are more frequent than bear markets. Corrections can last only days or months and can be positive when it adjusts overvalued assets from questionable exuberance in the market, providing buying opportunities.