2009 Average Annual Returns for the S&P 500

Happy New Year! To start out the new year I was curious what the annualized returns where for the S&P 500. It has been a rough decade for stocks so I wanted to see the numbers.

My methodology was to take all of the returns of the S&P 500 going back to 1926. Then I calculated the average annual returns for 3, 5, 10, 20 and 30 years. The chart below shows 2009 compared to the best, worst and average annual returns for the respective time periods.

So while it is one of the worst decades since 1926. It's a far cry from the Great Depression where the 3 year average annual return was (-26.96%) and five year average annual return was (-12.47%). The other thing to note is while the 20 year average return is trailing the long term average, investors who stayed invested for the last 30 years still averaged 8.21%. That's inclusive of the last two bear markets. Interestingly enough, investors who weathered the storm for the last 30 years are right in line with the historical average of 11.27%.

Only time will tell what will happen, but most of us might want to extend our time horizon out further when looking at our investments. If history holds true the next 10 years should be much better than the last.