Stock Market Education

S&P 500 Real Rates of Return 2000-2018

Real Rates of Return 2000-2018

 

 

Let’s talk rates of return and whether they are your friend or not. When I am talking with a new client, I am always asked my yearly average return. Let me please explain why the correct question should be, “What is your average portfolio growth?”

I started managing accounts in 2000, so I used the most recent returns for the S&P from the year 2000 for my example. Any advisor is trained to give a linear (orange) line rate-of-return average for the S&P 500. Most advisors give the standard 7.75% historical average since 1951, missing the great depression years.

Since 2000, the average rate of return for the S&P 500 is actually only 4.6589%. Looking back at the orange line, why do you think an advisor would use this linear average return as an expectation of future returns? Isn’t it reasonable to know, on average, how you can expect your account to grow?

Now look at the real yearly returns, which are represented by the blue line. There are plenty of down years that are below zero, and we tend to forget that those negative years leave less money to grow during the “up” years.

Real market returns are NOT linear. The relevant question you should ask your investment advisor or manager is, “How much portfolio growth have you achieved?” Why? Because every $10 you invested in 2000 is now worth only $18.88 in 2018, based on an average S&P 500 return. You have not doubled your money.

Please look at the grey line to view the growth of your $10 year by year. You have not grown the portfolio in a linear fashion.  You have not even doubled your money over the expected 7.75-year period.

The truth is, for 18 years you probably have not had market growth double your portfolio. You may have added money every month in a 401K, but saving money is not the same as growing your portfolio. The numbers don’t lie when I tell you “average rates of return” are just averages and they are not your friend!

 

888-287-1030  Toll Free

www.myhurleyinvestment.com

support@hurleyinvestments.com

 

S&P 500 Index – Historical Annual Data from:

https://www.macrotrends.net/2526/sp-500-historical-annual-returns

Year Average
Closing Price
Year Open Year High Year Low Year Close Annual
% Change
2018 2,758.43 2,695.81 2,930.75 2,581.00 2,651.07 -0.84%
2017 2,449.08 2,257.83 2,690.16 2,257.83 2,673.61 19.42%
2016 2,094.65 2,012.66 2,271.72 1,829.08 2,238.83 9.54%
2015 2,061.07 2,058.20 2,130.82 1,867.61 2,043.94 -0.73%
2014 1,931.38 1,831.98 2,090.57 1,741.89 2,058.90 11.39%
2013 1,643.80 1,462.42 1,848.36 1,457.15 1,848.36 29.60%
2012 1,379.61 1,277.06 1,465.77 1,277.06 1,426.19 13.41%
2011 1,267.64 1,271.87 1,363.61 1,099.23 1,257.60 0.00%
2010 1,139.97 1,132.99 1,259.78 1,022.58 1,257.64 12.78%
2009 948.05 931.80 1,127.78 676.53 1,115.10 23.45%
2008 1,220.04 1,447.16 1,447.16 752.44 903.25 -38.49%
2007 1,477.18 1,416.60 1,565.15 1,374.12 1,468.36 3.53%
2006 1,310.46 1,268.80 1,427.09 1,223.69 1,418.30 13.62%
2005 1,207.23 1,202.08 1,272.74 1,137.50 1,248.29 3.00%
2004 1,130.65 1,108.48 1,213.55 1,063.23 1,211.92 8.99%
2003 965.23 909.03 1,111.92 800.73 1,111.92 26.38%
2002 993.93 1,154.67 1,172.51 776.76 879.82 -23.37%
2001 1,192.57 1,283.27 1,373.73 965.80 1,148.08 -13.04%
2000 1,427.22 1,455.22 1,527.46 1,264.74 1,320.28 -10.14%
1999 1,327.33 1,228.10 1,469.25 1,212.19 1,469.25 19.53%
1998 1,085.50 975.04 1,241.81 927.69 1,229.23 26.67%
1997 873.43 737.01 983.79 737.01 970.43 31.01%
1996 670.49 620.73 757.03 598.48 740.74 20.26%
1995 541.72 459.11 621.69 459.11 615.93 34.11%
1994 460.42 465.44 482.00 438.92 459.27 -1.54%
1993 451.61 435.38 470.94 429.05 466.45 7.06%
1992 415.75 417.26 441.28 394.50 435.71 4.46%
1991 376.19 326.45 417.09 311.49 417.09 26.31%
1990 334.63 359.69 368.95 295.46 330.22 -6.56%
1989 323.05 275.31 359.80 275.31 353.40 27.25%
1988 265.88 255.94 283.66 242.63 277.72 12.40%
1987 287.00 246.45 336.77 223.92 247.08 2.03%
1986 236.39 209.59 254.00 203.49 242.17 14.62%
1985 186.83 165.37 212.02 163.68 211.28 26.33%
1984 160.46 164.04 170.41 147.82 167.24 1.40%
1983 160.47 138.34 172.65 138.34 164.93 17.27%
1982 119.71 122.74 143.02 102.42 140.64 14.76%
1981 128.04 136.34 138.12 112.77 122.55 -9.73%
1980 118.71 105.76 140.52 98.22 135.76 25.77%
1979 103.00 96.73 111.27 96.13 107.94 12.31%
1978 96.11 93.82 106.99 86.90 96.11 1.06%
1977 98.18 107.00 107.00 90.71 95.10 -11.50%
1976 102.04 90.90 107.83 90.90 107.46 19.15%
1975 86.18 70.23 95.61 70.04 90.19 31.55%
1974 82.78 97.68 99.80 62.28 68.56 -29.72%
1973 107.44 119.10 120.24 92.16 97.55 -17.37%
1972 109.13 101.67 119.12 101.67 118.05 15.63%
1971 98.32 91.15 104.77 90.16 102.09 10.79%
1970 83.15 93.00 93.46 69.29 92.15 0.10%
1969 97.77 103.93 106.16 89.20 92.06 -11.36%
1968 98.38 96.11 108.37 87.72 103.86 7.66%
1967 91.96 80.38 97.59 80.38 96.47 20.09%
1966 85.18 92.18 94.06 73.20 80.33 -13.09%
1965 88.16 84.23 92.63 81.60 92.43 9.06%
1964 81.37 75.43 86.28 75.43 84.75 12.97%
1963 69.86 62.69 75.02 62.69 75.02 18.89%
1962 62.32 70.96 71.13 52.32 63.10 -11.81%
1961 66.27 57.57 72.64 57.57 71.55 23.13%
1960 55.85 59.91 60.39 52.20 58.11 -2.97%
1959 57.42 55.44 60.71 53.58 59.89 8.48%
1958 46.20 40.33 55.21 40.33 55.21 38.06%
1957 44.42 46.20 49.13 38.98 39.99 -14.31%
1956 46.64 45.16 49.64 43.11 46.67 2.62%
1955 40.50 36.75 46.41 34.58 45.48 26.40%
1954 29.72 24.95 35.98 24.80 35.98 45.02%
1953 24.72 26.54 26.66 22.71 24.81 -6.62%
1952 24.45 23.80 26.59 23.09 26.57 11.78%
1951 22.32 20.77 23.85 20.69 23.77 16.46%
1950 18.39 16.66 20.43 16.65 20.41 21.78%
1949 15.24 14.95 16.79 13.55 16.76 10.26%
1948 15.51 15.34 17.06 13.84 15.20 -0.65%
1947 15.15 15.20 16.20 13.71 15.30 0.00%
1946 17.07 17.25 19.25 14.12 15.30 -11.87%
1945 15.14 13.33 17.68 13.21 17.36 30.72%
1944 12.47 11.66 13.29 11.56 13.28 13.80%
1943 11.52 9.84 12.64 9.84 11.67 19.45%
1942 8.67 8.89 9.77 7.47 9.77 12.43%
1941 9.83 10.48 10.86 8.37 8.69 -17.86%
1940 11.01 12.63 12.77 8.99 10.58 -15.29%
1939 12.05 13.08 13.23 10.18 12.49 -5.45%
1938 11.48 10.52 13.91 8.50 13.21 25.21%
1937 15.41 17.02 18.68 10.17 10.55 -38.59%
1936 15.45 13.40 17.69 13.40 17.18 27.92%
1935 10.58 9.51 13.46 8.06 13.43 41.37%
1934 9.83 10.11 11.82 8.36 9.50 -5.94%
1933 9.04 6.83 12.20 5.53 10.10 46.59%
1932 6.92 7.82 9.31 4.40 6.89 -15.15%
1931 13.66 15.85 18.17 7.72 8.12 -47.07%
1930 21.00 21.18 25.92 14.44 15.34 -28.48%
1929 26.19 24.81 31.86 17.66 21.45 -11.91%
1928 19.94 17.76 24.35 16.95 24.35 37.88%
 

 

 

 

Related posts

How to make money using options ” Both Ways”?

admin

What is the Put Option ?

admin

How to Sell a Stock Short

admin

What is the Call Option?

admin

Stock Market Basics – 10-26-2015

Kevin Hurley

Trade Findings or Adjustments 02-07-2019

admin

Leave a Comment