What do markets actually return on average?
The single most useful reference for judging any projection, promise, or pitch. Long run averages, where they come from, and how to use them without fooling yourself.
Every financial projection stands on one assumption: the rate of return. Pick a fantasy number and the whole plan is fantasy. The table below summarizes long run historical averages for the major asset classes an everyday US investor can own. Figures are approximate, rounded, and stated per year.
| Asset class | Average return | After inflation | Period |
|---|---|---|---|
| US large stocks, S&P 500 | about 10% | about 7% | 1928 to 2024 |
| US 10 year Treasury bonds | about 4.8% | about 1.8% | 1928 to 2024 |
| US Treasury bills, cash | about 3.3% | about 0.3% | 1928 to 2024 |
| Gold | about 8% | about 4% | 1971 to 2024 |
| US home prices | about 4.6% | about 1.6% | 1987 to 2024 |
| US inflation, CPI | about 3% | 1928 to 2024 |
Sources: annual return datasets maintained by Aswath Damodaran at NYU Stern, based on S&P and Federal Reserve data; S&P CoreLogic Case Shiller National Home Price Index for housing; US Bureau of Labor Statistics CPI for inflation; London gold fixing prices since the end of the gold standard in 1971. Figures are geometric averages, rounded, and include reinvested income where applicable.
How to read these numbers honestly
Averages hide violence
The S&P 500 averaged about 10% a year over the last century, but almost no single year returned near 10%. Annual results routinely land anywhere between minus 20% and plus 30%. The average only shows up if you stay invested through the whole ride, including drops of 50% like 2008.
The order of returns matters when you withdraw
Two retirees can earn the same average return and end up in totally different places if one hits a crash early in retirement while withdrawing. This is sequence risk, and it is why retirement planning uses lower assumed returns and rules of thumb like the 4% rule rather than the raw stock average.
Past averages are evidence, not entitlements
A century of US data reflects a century of unusual American success. Many careful forecasters expect future decades to return somewhat less, which is why our calculators default to 7% for stocks rather than 10%. If a plan only works at 10%, it is not a plan, it is a hope.
Home prices are not stock returns
Housing appreciates only modestly ahead of inflation on average. Homeownership builds wealth mainly through leverage, forced saving of principal payments, and living in the asset, not through the price growth itself. Compare that honestly against the costs: interest, tax, insurance, and upkeep.
Use the baselines
Take these averages into the investment growth calculator to project contributions, stress test your retirement in the retirement calculator, and check what fees would take from those returns in the fee impact calculator.