Investing in the stock market can be a great way to grow your wealth, but not all investments are equal. Historically, the S&P 500 itself has earned an average rate of return of around 10% per year. This doesn't necessarily mean you'll earn 10%, but it does illustrate that the S&P 500 has been a reliable and consistent performer over the long-term. So, what exactly is the average return of the S&P 500?
Since 1950, the S&P 500 has produced an average 12-month return of 10.5% after a golden cross formed, while the overall average annual return since 1950 is just 6%. This means that while the S&P 500 has been a reliable performer over the long-term, it has also suffered significant losses. For example, in 2008 the S&P 500 fell nearly 37%, and in 2000 it lost 10%.
Despite these losses, the S&P 500 has consistently rebounded in the years following these steep losses. Since the average annual return of the S&P 500 is about 6% over rolling 10-year periods, January's performance was pretty extraordinary. In all three cases, the S&P 500 skyrocketed in the years immediately following those steep losses, producing an average return of 27.1% in the year following the 2008 crash, and 18.4% in the year following the 2000 crash.
Even legendary investor Warren Buffett has underperformed the S&P 500 over the past two decades. Yet Berkshire stock is behind the S&P 500 over the past 20 years with a 10.1% annualized return against 10.3% for the index. Over the past five years, the gap has widened with Buffett's stock losing 0.4% versus a gain of 19.8% for the index.
Exchange-traded funds (ETFs) such as the S&P 500 Index Fund (AMEX:SPY) or the SPDR S&P 500 ETF Trust (AMEX:SPY) are a great way to invest in the S&P 500 without having to pick individual stock. These funds enable investor to earn the average stock market return. For the S&P 500, that has been around 9.4% annually over the last 50 years.
Many investor also use the S&P 500 as a benchmark for their own invest performance. stock close higher Wednesday after Fed meeting. The major averages settled higher following the Federal Reserve's latest policy meeting. The Dow Jones Industrial Average climbed 0.5%, or 110.36 points, to close at 23,731.17. The S&P 500 advanced 0.5% to 2,843.35 while the Nasdaq Composite added 0.7% to 8,919.45.
Meanwhile, according to the latest Forbes ranking, the 30 stock in the S&P 500 that have been in the index the longest have outperformed the index. Their average return since Feb. 2, 2022, when that year-ago ranking was published, has been a loss of 21.7%, versus a 9.7% loss for the S&P 500.
As the S&P 500 continues to produce strong returns, it's important to remember that past performance is no guarantee of future results. Volatility is an inherent part of Investing, and there are no guarantees that the S&P 500 will continue to post strong returns in the future.
With that said, the S&P 500 has consistently outperformed its peers over the long-term, and is likely to continue to do so. Investing in the S&P 500 is a great way to earn a solid return over the long-term, while at the same time minimizing risk.
While there is no guarantee that the S&P 500 will continue to post strong returns in the future, the historical performance of the index is a good indication of the potential returns that investor can expect over the long-term. The average return of the S&P 500 is around 10%, and this is a great way to grow your wealth over time.
Investing in the S&P 500 can be a great way to grow your wealth, but it is important to remember that past performance is no guarantee of future results. Investing in the stock market involves some degree of risk, so it's important to do your research before Investing.
There are a variety of tools and resources available to help you make informed Investing decisions. As with any invest strategy, it's important to carefully consider your risk tolerance and invest goals before making any decisions.
Ultimately, the average return of the S&P 500 is around 10%, and this is a great way to grow your wealth over time. Investing in the S&P 500 is an easy and reliable way to benefit from the stock market, and the long-term returns are likely to be attractive.
However, it is important to remember that past performance is no guarantee of future results. As with any invest strategy, it's important to carefully consider your risk tolerance and invest goals before making any decisions.
